WASHINGTON — Key negotiators struck an agreement in principle Saturday night to extend the debt ceiling and avert a catastrophic default, just days before the Treasury Department said the U.S. could run out of money, Speaker Kevin McCarthy said Saturday.
The deal — which is expected to raise the country's borrowing authority in exchange for cuts to spending — still has to be converted into legislative language and pass both the Republican-led House and Democratic-controlled Senate. It follows weeks of negotiations led by President Joe Biden and Speaker Kevin McCarthy, amid demands by the GOP to extract spending cuts in exchange for allowing the nation to continue to payits bills.
"We’ve come to an agreement in principle that is worthy of the American people," McCarthy said Saturday on Twitter.
"We still have more work to do tonight to finish all the writing of it," McCarthy told reporters outside his Capitol office, adding that he expects to post the text on Sunday and hold a House vote on it Wednesday.
He added that he'll speak to Biden again on Sunday.
A source familiar with the agreement said it includes a two-year appropriations deal and a two-year debt limit extension, effectively resolving the issue until after the 2024 election. It'll include work requirements for receiving federal aid from the Supplemental Nutrition Assistance Program, or SNAP, for Americans up to age 54, with exceptions for homeless people and veterans. But there will be "no changes to Medicaid," the source added.
By averting the crisis, the White House would be sidestepping a first-ever default that threatens to wipe out millions of jobs and devastate the American economy, rocking faith in Biden's leadership — and the divided Congress — as he embarks on a re-election bid.
Biden and McCarthy spent an hour and a half on a call Saturday night, a rare one-on-one conversation between the two leaders that followed days of fraught talks over the final sticking points.
Top Republicans had been in and out of the speaker's office on Saturday as negotiations continued, with some of the talks taking place virtually and by phone. Shalanda Young, a top negotiator for the White House, was in Louisiana to deliver graduation remarks at Xavier University where she quipped that the two-hour break was "the most fun I’ve had in two weeks.”
Republican leaders began preparing to sell a bill to the GOP conference late Friday with a deal still out of reach.
Conservatives skeptical of Republican leadership had threatened to hold up the bill if the speaker struck a deal with Democrats that failed to slash spending, with one outside adviser warning of coming “trench warfare.”
McCarthy has said in recent days he'll give members 72 hours to review the text before holding a floor vote. And Sen. Mike Lee, R-Utah, has threatened to block a speedy vote in the Senate if he isn't satisfied with the terms of the deal, meaning it could take days for the chamber to jump through procedural hoops before a vote.
Extending the debt ceiling doesn’t authorize new spending into the future; it enables the U.S. to pay existing debts that both parties have accumulated over many years through demands for higher spending on domestic and military programs, as well as lower taxes.
Negotiating staff for McCarthy and the White House held back-to-back negotiating sessions, some stretching late into the night before resuming again. The Republican push to add work requirements to social safety net programs remained an obstacle until the final moment.
By the time a deal was announced Saturday, Democratic angst was reduced to a low simmer. Biden's low profile in the talks had drawn consternation from some members of his party who feared the president was ceding the messaging war to Republicans.
Calls for Biden to use the bully pulpit of his office took on a fevered pitch as some worried about the need to sell a bill with deep concessions to voters next year. Vice President Kamala Harris, who had entered the talks publicly one week earlier before helming a glitchy Zoom call, had also kept a low profile.
As anxiety mounted, so did pressure on Biden not to turn away from options to tackle the debt unilaterally, such as invoking the 14th Amendment.
“The only option right now is for Congress to do their jobs without conditions,” White House press secretary Karine Jean-Pierre said.
On Friday, Deputy Treasury Secretary Wally Adeyemo ruled it out with a firm “no.”
Treasury Secretary Janet Yellen set a June 5 deadline for when the government was expected to blow through the debt limit, heightening pressure in the final days.
This article was originally published on NBCNews.com