Debt ceiling talks get major update.

The White House and House Republicans have reached an agreement in principle, House Speaker Kevin McCarthy announced on Saturday evening.

“We still have a lot of work to do. But I believe this is an agreement in principle that’s worthy of American people,” McCarthy told reporters on Capitol Hill.

“That’s historic reductions in spending, consequential reforms that will lift people out of poverty into the workforce, reign in government overreach. There are no new taxes, no new government programs. There’s a lot more within the bill. We still have more work to do tonight to finish all the writing of it,” he said.

President Joe Biden said the agreement is “good news” as the deal “reduces spending while protecting programs for working people and growing the economy for everyone.”

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

Biden urged the House and Senate “to pass the agreement right away.”

Details of the Agreement

• The debt limit will be raised for two years
• Spending caps will be placed over that time
• Work requirements for food aid will be increased

The final text of the bill, according to the House Speaker, will be ready on Sunday, and voting will take place next Wednesday.

McCarthy refused to offer details on the deal, although some media reports citing anonymous sources claimed that both parties agreed to raise the nation’s debt limit for two years and place spending caps over that time, as well as increase work requirements for food aid.

Why Negotiations Took So Long

Since the U.S. government crossed the $31.4 trillion debt limit approved by Congress in January, the White House has insisted that the president would not tolerate any negotiations threatening a default.

“I will not negotiate whether America pays its debt,” he said in a February 2023 tweet. “I will not allow this nation to default.”

During briefings, Press Secretary Karine Jean-Pierre repeatedly told reporters that it is imperative to raise the debt ceiling without any preconditions, “as they have done in Democratic and Republican administrations.”

Earlier this month, Biden met with four top congressional leaders after Treasury Secretary Janet Yellen warned the government could run out of cash to cover its obligations as early as June 1. However, Jean-Pierre confirmed at the time that Biden was not discussing the debt ceiling but rather “a separate conversation about their spending, what they want to do with the budget.”

How Biden, McCarthy Managed Talks

Following an hour-long meeting on May 16, President Biden and McCarthy agreed to daily and direct deliberations. Then, as the president traveled to Japan for the G7 summit, which had been overshadowed by the default risk in Washington, the two sides picked representatives to negotiate the debt ceiling.

Rep. Garret Graves (R-La.) engaged with Office of Management and Budget head Shalanda Young and White House adviser Steve Ricchetti.

This led to plenty of optimism that a deal was approaching as McCarthy congratulated the president because he “changed the scope” of discussions, signaling “a better process.”

“There was an overwhelming consensus, I think, in today’s meeting with congressional leaders that defaulting on the debt is simply not an option,” Biden said.

Biden cut his overseas trip to meet with McCarthy. The two held a “productive” discussion when he returned to Washington. Biden acknowledged that the federal government needs to cut spending but he also noted that lawmakers need to address tax loopholes and ensure the wealthy are paying their fair share.

“We still have some disagreements, but I think we may be able to get where we have to go. We both know we have a significant responsibility,” Biden told reporters on May 22.

Sparks Fly

Rep. Chip Roy (R-Texas) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) were among the lawmakers who expressed concerns about the negotiations, which might make the bill hard to advance through Congress.

On Friday, Treasury Secretary Janet Yellen revised the projected X-date for the budget ceiling to June 5, delaying the possibility of the United States defaulting on its debt obligations by four days.

The agreement comes as the Treasury’s cash balance was shrinking at an alarming level, falling below $50 billion on May 24, down from $316.381 billion at the start of the month.