Biden, McCarthy strike deal to avoid default. Now it’s up to Congress.

President Joe Biden and House Speaker Kevin McCarthy announced late Saturday night that they have reached a tentative agreement to raise the nation’s debt ceiling and avoid a catastrophic default. The two sides finalized preliminary negotiations on the phone over the holiday weekend, characterizing it as an “agreement in principle.”

The text of the deal had not yet been finalized as of Saturday and is not guaranteed to garner the congressional support needed to pass. McCarthy said Saturday night that the House would vote on it Wednesday, five days before June 1, which is Treasury Secretary Janet Yellen says the U.S. will run out of funds absent a debt limit increase.

“The agreement represents a compromise, which means not everyone gets what they want. That’s the responsibility of governing,” Biden said in a tweet.

Earlier this evening, Speaker McCarthy and I reached a budget agreement in principle.

It is an important step forward that reduces spending while protecting critical programs for working people and growing the economy for everyone. And, the agreement protects my and…

— President Biden (@POTUS) May 28, 2023

Biden and Democrats had previously pushed for Congress to pass a clean debt ceiling hike, which would not have included any spending cuts.

McCarthy and House Republicans, meanwhile, had passed a bill that would dramatically cut deficits while raising the debt limit. Democrats had characterized the bill as a nonstarter.

“It’s a first offer at a bargaining table,” former Trump economic advisor Kevin Hassett had said of the House bill.

McCarthy said he plans to release the text of the bill Sunday when finalized between his staff and the White House.

“This is an agreement in principle that’s worthy of the American people,” McCarthy said. “It has historic reductions in spending, consequential reforms that will lift people out of poverty into the workforce, reined in government overreach. There are no new taxes, no new government programs.”

I just got off the phone with the president a bit ago. After he wasted time and refused to negotiate for months, we've come to an agreement in principle that is worthy of the American people.

I'll deliver a statement at 9:10pm ET. Watch here:https://t.co/vmn31INPH5

— Kevin McCarthy (@SpeakerMcCarthy) May 28, 2023

The president strongly urged the House and Senate to immediately pass the measure to avoid any dire consequences of default.

This agreement is good news for the American people, because it prevents what could have been a catastrophic default and would have led to an economic recession, retirement accounts devastated, and millions of jobs lost,” Biden said.