According to US media reports, the outline of the deal includes freeing up the debt ceiling for two years, meaning there will be no need for negotiations in 2024, when the nation is in full presidential election swing.
The big spending cuts Republicans wanted are not there, according to reports, but effectively a budget freeze will take effect. There will also be tougher rules on accessing unemployment benefits and other federal assistance.
Biden said “the agreement represents a compromise, which means not everyone gets what they want. That’s the responsibility of governing”.
DEADLINES
Treasury Secretary Janet Yellen had initially warned of a possible default on Jun 1 if Congress failed to raise the ceiling on borrowing, but gave lawmakers some breathing room on Friday when she updated the estimate to Jun 5.
Even so, the legislation will still have to clear Congress much more quickly than the normal timetable for even the most uncontroversial Bills.
Under House rules, lawmakers have to be given 72 hours before voting once a Bill is presented. And if it passes the House, it will then have to go through the Senate, where Democrats hold the majority.
McCarthy is hoping to bring the narrow House majority of 222 Republicans with him, but the deal is likely to face opposition from 35 far-right lawmakers who told him to “hold the line” against compromising on far more sweeping spending cuts. That means a large number of Democrats will have to be persuaded to vote with a reduced number of Republicans – something that rarely happens on big Bills.
In a sign of the uphill battle McCarthy might face corralling his party’s votes, hardline conservative Representative Lauren Boebert said she would oppose the deal.
“Our voters deserve better than this,” she said in a tweet on Saturday night. “You can count me as a NO on this deal.”
The Democrats, meanwhile, may face their own rebellion on the left of the party, which objects to any spending restrictions.
Congress was adjourned for an extended holiday weekend but lawmakers will be called back to vote.
If a default occurs, the government would not miss loan repayments until mid-June but in the meantime it would likely have to halt US$25 billion in social security checks and federal salaries.
The battle has been monitored closely by the major ratings agencies, with Morningstar and Fitch both warning that they could opt for a downgrade, even if crisis is averted.
When Barack Obama’s administration narrowly averted a default 12 years ago, a ratings downgrade cost taxpayers more than US$1 billion in higher interest costs.
Source: CNA
