Top White House and Republican negotiators on Saturday reached a deal in principle to raise the debt limit for two years while cutting and capping some government spending over the same period, a breakthrough after a marathon set of crisis talks that has brought the nation within days of its first default in history, three people familiar with the agreement said.
Congressional passage of the plan before June 5, when the Treasury is projected to exhaust its ability to pay its obligations, was not assured, particularly in the House. Republicans hold a narrow majority in the chamber, and right-wing lawmakers who had demanded significantly larger budget cuts in exchange for lifting the borrowing limit are all but certain to revolt.
But the compromise, which would effectively freeze federal spending that had been on track to grow, had the blessing of both President Biden and Speaker Kevin McCarthy, raising hopes that it could break the fiscal stalemate that has gripped Washington and the nation for weeks, threatening an economic crisis. The two spoke by phone on Saturday evening to resolve final sticking points.
The people who spoke about the deal did so on the condition of anonymity because they were not authorized to comment publicly in advance of a formal announcement.
It was structured with the aim of enticing votes from both parties, though it would most likely draw the ire not only of conservative Republicans but also Democrats furious at being asked to vote for cuts they oppose with the threat of default looming. Still, it gives Republicans the ability to say that they succeeded in reducing some federal spending — even as funding for the military and veterans’ programs would continue to grow — while allowing Democrats to say they spared most domestic programs from significant cuts.
This is a developing story. Check back for updates.