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‘Agreement in principle’ reached in US debt crisis talks

‘Agreement in principle’ reached in US debt crisis talks

The White House has reached an “agreement in principle” with the Republicans on a deal to limit federal spending and resolve a looming debt crisis, House Speaker Kevin McCarthy has confirmed.

The deal on a two-year budget is believed to include a debt-limit increase and enhanced work requirements for food aid.

Mr McCarthy said he spoke to President Joe Biden by phone on Saturday about the agreement which could be voted on in the House and Senate next week ahead of the June 5 deadline.

Central to the package is a two-year budget deal that would hold spending flat for 2024 and impose limits for 2025 in exchange for raising the debt limit for two years, pushing the volatile political issue past the next presidential election.

Mr Biden said: “It is an important step forward that reduces spending while protecting critical programmes for working people and growing the economy for everyone. And the agreement protects my and Congressional Democrats’ key priorities and legislative accomplishments.

“The agreement represents a compromise, which means not everyone gets what they want. That’s the responsibility of governing.

“This agreement is good news for the American people, because it prevents what could have been a catastrophic default and would have led to an economic recession, retirement accounts devastated, and millions of jobs lost.

“Over the next day, our negotiating teams will finalise legislative text and the agreement will go to the United States House and Senate. I strongly urge both chambers to pass the agreement right away.”

Speaking briefly at the Capitol, Mr McCarthy said “we still have a lot of work to do”.

He said: “I believe this is an agreement in principle that’s worthy of the American people.”

Later, in an interview on Fox News Sunday, Mr McCarthy said: “Maybe it doesn’t do everything for everyone but this is a step in the right direction that no one thought we would be at today.

“I’ll debate this Bill with anybody because at the end of the day, is it everything I wanted? No. But we don’t control all of it.”

Negotiators agreed to some Republican demands for enhanced work requirements on recipients of food stamps that had sparked an uproar from House Democrats.

As he arrived at the Capitol early in the day, Mr McCarthy said Republican negotiators were “closer to an agreement”.

His comments had echoed the latest public assessment from Mr Biden, who said bargainers were “very close” on Friday.

Their discussion on Saturday came after treasury secretary Janet Yellen told Congress the United States could default on its debt obligations by June 5 — four days later than previously estimated.

But as another day dragged, it had appeared some of the problems over policy issues that dogged talks all week remained unresolved.

Both sides had suggested one of the main hold-ups is a Republican effort to expand the existing work requirements for recipients of food stamps and other federal aid programs, a long-time Republican goal which Democrats had strenuously opposed.

The White House said the Republican proposals were “cruel and senseless”.

Support from both parties will be needed to win congressional approval before the June 5 deadline.

Lawmakers are not expected to return to work from the Memorial Day weekend before Tuesday and Mr McCarthy has promised he will post any bill for 72 hours before voting.

The Democratic-held Senate has largely stayed out of the negotiations but Senate majority leader Chuck Schumer of New York has pledged to move quickly to send a compromise package to the president’s desk.