What's in the debt ceiling deal the US just reached?

At the end of a 90-minute phone call on May 27, President Joe Biden and House Speaker Kevin McCarthy reached a preliminary agreement on raising the debt ceiling.

Now, both Democrats and Republicans will have to convince their allies in both the Senate and the House to pass the deal before June 5, the day Treasury Secretary Janet Yellen warned that the US would default on its bills.

End the stalemate

If the final deal is passed by Congress and signed into law by Mr. Biden before X day (the date the US is expected to default on its debt, June 5), the US will avoid an unprecedented economic crisis.

The prolonged standoff has spooked financial markets, weighed on stocks and forced the US to pay record high interest rates in several bond sell-offs. Economists say a US default would push the country into recession, shake the global economy, and lead to a spike in unemployment.

President Biden has refused to negotiate with Mr. McCarthy on spending cuts for months, demanding that lawmakers pass a debt ceiling increase without conditions. The two-way talks between Mr. Biden and Mr. McCarthy began on May 9, but really got serious on May 16.

Despite the agreement in principle, raising the debt ceiling is still a long way off. McCarthy has said he will give House members 72 hours to read the bill before it is voted on. The bill needs at least nine Republican votes to pass in the Senate.

The US Treasury Secretary warned on May 26 that the US would default on its debt on June 5 if it did not act promptly. Photo: theitem.com

“We still have a lot of work to do, but I believe this is an agreement in principle that is worthy of the American people,” McCarthy told reporters at the Capitol on May 27. The Republican leader said he expected to finish writing the bill by May 28, then speak again with Biden that same day and schedule a vote for May 31.

The White House plans to hold a press conference with Democrats on May 28, a Democratic aide said, CNN reported.

Although an agreement in principle has been reached, new problems may still arise during implementation, and each step takes time. In addition, observers expect fierce opposition from both the left and the right. Therefore, active support from both sides is needed to truly find common ground.

Final problem

The deal in principle would raise the debt ceiling, currently at $31.4 trillion, for two years while capping non-defense spending at current levels in fiscal 2024, then increasing it by 1% in fiscal 2025.

The White House also appears to have made concessions to House Republican negotiators on work requirements for food stamp recipients.

The deal also sets new requirements for some recipients of government aid, including food stamps and temporary assistance for poor families. The food assistance program for people 54 and younger without children would end in 2030, expanding access to veterans and the homeless.

The current requirement for the supplemental nutrition assistance program (SNAP) will only apply to certain people between the ages of 18 and 49.

The tentative deal would also restore unused money from the previous pandemic relief bill and reduce new enforcement funding for the Tax Fraud Prevention Act by $10 billion (from $80 billion to $70 billion).

It was not until May 16 that President Joe Biden and House Speaker Kevin McCarthy officially began serious negotiations on the debt ceiling after the Treasury Department repeatedly warned of the risk of the federal government defaulting in June. Photo: NBC News

New requirements for some social safety net programs remain the final sticking point, according to CNN.

Republicans have argued that beneficiaries of programs like food stamps and people without dependents should be forced to follow the new rules. Democrats, however, have viewed the idea as an attack on the poor.

For months, Republicans have steadfastly resisted the idea of ​​raising the debt ceiling unless Mr. Biden agreed to spending cuts. The final deal achieved their goals, but only modestly.

A New York Times analysis of the spending limits in the deal found that Congress would reduce federal spending by only about $650 billion, a cut that would be too small to win over conservatives in the House.

Mr. McCarthy has repeatedly expressed confidence that a majority of Republicans will vote for the deal, but it remains unclear how many Republicans actually support it, and how many Democrats would need to vote to offset Republican opposition .

Nguyen Tuyet (According to NY Times, CNN, Reuters, Bloomberg)

Source: https://www.nguoiduatin.vn/co-gi-trong-thoa-thuan-tran-no-ma-my-vua-dat-duoc-a609943.html