The White House and House Republicans reached an agreement in principle on Saturday to raise the debt limit and avert a default.
The agreement was reached with little time to spare, given a deadline of June 5. That is the date that Treasury Secretary Janet Yellen said that the U.S. government will default on its debt if the $31.4 trillion debt ceiling is not raised.
For months, Biden and McCarthy have been engaged in a high stakes game of political brinksmanship. The president initially said that he would not engage in negotiations over anything other than a raising of the debt limit, warning of the dire consequences that would result to the U.S. and world economy should the country default. McCarthy, elected after making a series of concessions to the party’s right wing, has sought budget cuts and other concessions in exchange for rallying his caucus members to vote to raise the ceiling, something that his detractors, as well as Rep. Matt Gaetz (R-FL) have compared to a form of hostage taking.
“We now estimate that Treasury will have insufficient resources to satisfy the government’s obligations if Congress has not raised or suspended the debt limit by June 5,” Yellen wrote on Friday. She had previously estimated the date as early as June 1, but provided an update as negotiations continued this week.
Wall Street markets closed higher on Friday in anticipation of a deal. But there has been a great deal of uncertainty around the talks, and the next step will be for congressional leaders to convince members to support the deal.