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President Joe Biden and Kevin McCarthy reach final deal to prevent US default

With days to spare before a potential first-ever government default, US President Joe Biden and House Speaker Kevin McCarthy reached final agreement (Manuel Balce Ceneta/AP)
With days to spare before a potential first-ever government default, US President Joe Biden and House Speaker Kevin McCarthy reached final agreement (Manuel Balce Ceneta/AP) With days to spare before a potential first-ever government default, US President Joe Biden and House Speaker Kevin McCarthy reached final agreement (Manuel Balce Ceneta/AP)

With days to spare before a potential first-ever government default, US President Joe Biden and House Speaker Kevin McCarthy reached final agreement.

On Sunday they agreed on a deal to raise the nation’s debt ceiling and worked to ensure enough Republican and Democratic votes to pass the measure in the coming week.

The Democratic president and Republican speaker spoke with each other on Sunday evening as negotiators rushed to draft the bill text so politicians can review compromises that neither the hard-right or left flank is likely to support. Instead, the leaders are working to gather backing from the political middle as Congress hurries toward votes before a June 5 deadline to avert a damaging federal default.

“Good news,” Mr Biden declared on Sunday evening at the White House.

House Speaker Kevin McCarthy of Calif., speaks with members of the press about debt limit negotiations Saturday, May 27, 2023, on Capitol Hill in Washington
House Speaker Kevin McCarthy of Calif., speaks with members of the press about debt limit negotiations Saturday, May 27, 2023, on Capitol Hill in Washington House Speaker Kevin McCarthy said of the deal: ‘At the end of the day, people can look together to be able to pass this’ (Patrick Semansky/AP)

“The agreement prevents the worst possible crisis, a default, for the first time in our nation’s history,” he said. “Takes the threat of a catastrophic default off the table.”

The president urged both parties in Congress to come together for swift passage. “The speaker and I made clear from the start that the only way forward was a bipartisan agreement,” he said.

The compromise announced late on Saturday includes spending cuts but risks angering some politicians as they take a closer look at the concessions.

Mr Biden told reporters at the White House upon his return from Delaware that he was confident the plan will make it to his desk.

President Joe Biden speaks in the Roosevelt Room of the White House on Sunday, May 28, 2023, in Washington
President Joe Biden speaks in the Roosevelt Room of the White House on Sunday, May 28, 2023, in Washington President Joe Biden and House Speaker Kevin McCarthy reached a final agreement on a deal to raise the nation’s debt ceiling (Manuel Balce Ceneta/AP)

Mr McCarthy, too, was confident in remarks at the Capitol: “At the end of the day, people can look together to be able to pass this.”

The days ahead will determine whether Washington is again able to narrowly avoid a default on US debt, as it has done many times before, or whether the global economy enters a potential crisis.

In the United States, a default could cause financial markets to freeze up and spark an international financial crisis.

Analysts say millions of jobs would vanish, borrowing and unemployment rates would jump, and a stock-market plunge could erase trillions of dollars in household wealth. It would all but shatter the 24 US trillion dollar market for treasury debt.

Anxious retirees and others were already making contingency plans for missed checks, with the next Social Security payments due soon as the world watches American leadership at stake.