President Joe Biden announced that Congress will receive a bipartisan debt ceiling increase plan to avoid a default.
He described the agreement as a “compromise” on Sunday, while Republican House Speaker Kevin McCarthy dubbed it “worthy of the American people” earlier in the day.
They must now persuade members of Congress to support the proposal.
The proposed agreement is the consequence of Democrats’ and Republicans’ protracted and contentious negotiations.
Without an agreement, the United States will run out of money on June 5, according to the Treasury.
The United States must borrow funds to finance its government because it spends more than it collects in taxes.
Republicans want to reduce education and other social programmes to raise the $31.4 trillion (£25 trillion) debt ceiling.
During a fleeting appearance before reporters on Sunday evening, Vice President Biden referred to the proposed agreement as “an extremely significant advance.”
“It eliminates the possibility of a catastrophic default and safeguards our hard-won and historic economic recovery.”
“The agreement is also a compromise, which means no one got everything they wanted, but that is the nature of governance.”
Mr. Biden said Mr. McCarthy bargained in “good faith” and that Congress now supported the accord.
What is the offer?
The proposed agreement is now available on the House website.
It is anticipated that non-defense government spending will remain relatively stable for two years before increasing by 1% in 2025.
The proposed accord would fully pay veterans’ medical care and not modify Medicaid.
Energy permitting laws will be streamlined to expedite the approval of new projects; this is a Republican-backed reform.
Unspent Covid relief funds will be recouped under the terms of the agreement, another Republican demand.
Proposed changes to the eligibility age for a government programme that helps low-income people buy food.
Late Saturday, a provisional deal was announced, but negotiations continued and the accord was finalised on Sunday.
Mr. McCarthy referred to “historic reductions in spending, consequential reforms that will lift people out of poverty and into the workforce” on Saturday.
He stated that there are no new taxes or government programs.
However, he may face Republican and Democratic opposition in the House, making it tough to approve. Representative Chip Roy of Texas, a Republican, stated on Sunday that he and others were “going to try” to prevent its passage.
Democrats control the Senate, 51 to 49, while Republicans control the House, 222 to 213.
Mr. McCarthy told Fox News on Sunday that more than 95% of Republicans in the House were enthusiastic about the agreement.
A U.S. default would destabilize the U.S. economy and global markets.
The US government would run out of money for welfare and other support programmes.
Long-term, the crisis would push the U.S. economy into recession, resulting in a rise in unemployment.
Many countries around the globe, for which the United States is a key trading partner, would be severely impacted by a US recession, as they would be unable to sell to an economy that does not purchase as much.
As the world’s reserve currency, a default would induce fear and raise commodity prices.