US President Joe Biden has announced a bipartisan agreement to raise the US debt ceiling, averting a potential crisis. In a brief appearance before reporters, Biden stated that he had reached a budget agreement with Speaker McCarthy and that it is now ready to move to the full Congress. The agreement is seen as a significant step in avoiding a catastrophic default, protecting the country's economic recovery, and ensuring the fulfillment of financial obligations.
The proposed deal, the result of extensive and contentious negotiations between Democrats and Republicans, comes after the Treasury warned that the US would run out of funds by June 5 without a resolution. The US government relies on borrowing to finance its expenditures due to a deficit between spending and tax revenues.
Republicans have sought spending cuts in various areas, such as education and social programs, in exchange for raising the $31.4tn debt limit. The proposed agreement, now published on the House website, outlines a plan to maintain non-defense government spending at a relatively constant level for two years, followed by a 1% increase in 2025. Medicaid health insurance would undergo no significant changes, and the agreement ensures full funding for medical care for veterans.
Another key aspect of the deal is the streamlining of energy permitting laws to expedite the approval process for new projects, addressing a reform long advocated by Republicans. Additionally, the agreement includes provisions to reclaim unspent Covid relief funds, responding to a demand from the Republican side.
Furthermore, certain adjustments are proposed for a government program that offers food-purchasing assistance to low-income individuals or those with no income.
The bipartisan agreement represents a significant development in US fiscal policy, demonstrating a commitment to addressing the country's debt ceiling and avoiding potential financial turmoil. The deal will now be presented to both the United States House and the Senate, with President Biden urging swift passage in both chambers. The focus remains on meeting financial obligations and fostering a robust economy, ensuring stability and progress for the nation.