Biden and McCarthy reach debt ceiling deal, avoiding national default

US President Joe Biden shakes hands as he presents a copy of his speech to House Speaker Kevin McCarthy of Calif., before he delivers his State of the Union address to a joint session of Congress, on February 7, 2023 in the House Chamber of the U.S. Capitol in Washington, DC.

Jacquelyn Martin-Pool/Getty Images

• The White House and House of Representatives have reached an agreement in debt ceiling talks.
• The agreement helps steer the country away from a catastrophic default on its debts.
• The deal was reached after weeks of contentious partisan negotiations.

The White House and House of Representatives have reached an agreement in principle in debt ceiling talks, avoiding national default.

"We still have a lot of work to do. But I believe this is an agreement in principle that's worthy of the American people," House Speaker Kevin McCarthy said in a statement confirming the tentative agreement Saturday evening.

He added: "It has historic reductions in spending, consequential reforms that will lift people out of poverty into the workforce. Reign in government overreach. There are no new taxes, no new government programs. There's a lot more within the bill. We still have more work to do tonight to finish all the writing of it."

McCarthy said he anticipated the bill text would be publicly available on Sunday, with a vote anticipated on Wednesday.

Representatives for the White House and Rep. McCarthy did not immediately respond to Insider's request for comment.

The deal was reached after weeks of contentious partisan negotiations. The GOP, spearheaded by McCarthy, has insisted that a debt ceiling raise should be tied to advancing their party's priorities through spending cuts.

Republican proposals in the debt ceiling negotiations included banning student-loan forgiveness, bolstering work requirements on welfare programs, and rescinding unspent pandemic funding, Insider previously reported. President Joe Biden vowed to veto such a proposal should it make it to his desk. 

The exact details of the deal remain unclear. However, two sources confirmed to Reuters that negotiators agreed discretionary spending would be capped at 2023 levels for two years — in exchange for a similar period of debt ceiling increases.

The agreement helps steer the country away from a potentially catastrophic debt default. Defaulting on the national debt could trigger an economic recession and send the dollar's value plummeting.

Since its introduction in 1917, the debt ceiling has been raised dozens of times to avoid such outcomes, Insider previously reported.

This story is developing. Please check back for updates.

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