Tentative deal to raise debt ceiling reached as default deadline looms

A tentative “agreement in principle” was reached Saturday night between Democrats and Republicans to raise the nation’s debt ceiling, averting a potential U.S. default.

President Joe Biden and House Speaker Kevin McCarthy reached the agreement after the two spoke earlier Saturday evening by phone.

Concessions were made with negotiators agreeing to some Republican demands for increased work requirements for recipients of food stamps,  This had upset House Democrats.

Support from both parties will be needed to win congressional approval next week before a June 5 deadline.

BIDEN, MCCARTHY REACH ‘AGREEMENT IN PRINCIPLE’ IN DEBT CEILING NEGOTIATIONS

President Joe Biden and House Speaker Kevin McCarthy have reached an “agreement in principle” to resolve the looming debt crisis. ( Chip Somodevilla/Kent Nishimura / Los Angeles Times / Getty Images)

A source familiar with the negotiations tells FOX News that it is a two-year budget deal and two-year debt limit increase.

It holds spending flat for 2024 and imposes limits for 2025.

Non-defense spending will be roughly flat with current (FY 2023) levels in 2024 when factoring in agreed upon appropriations adjustments. 

No changes to Medicaid.

Changes to SNAP that reduces work requirements for veterans, people who are homeless, others, while increasing age for work requirements from 49 to 54.

TOP MCCARTHY DEBT LIMIT NEGOTIATOR SAYS GOP WON’T CAVE ON WORK REQUIREMENTS

U.S. Speaker of the House Rep. Kevin McCarthy (R-CA) speaks to members of the media after arriving at the U.S. Capitol on May 26, 2023, in Washington, DC. Speaker McCarthy discussed the latest development of the debt ceiling negotiations with the Whi ((Photo by Win McNamee/Getty Images) / Getty Images)

“Earlier this evening, Speaker McCarthy and I reached a budget agreement in principle,’ said Biden.  “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 Congressional Democrats’ key priorities and legislative accomplishments.

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

“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. It has historic reductions in spending, consequential reforms that will lift people out of poverty into the workforce, rein in government overreach. There are no new taxes, no new government programs. There’s a lot more within the bill,” McCarthy said.

TREASURY AUCTION SIGNALS POSSIBLE LEEWAY ON JUNE 1 DEBT CEILING DEADLINE

Treasury Secretary Janet Yellen told Congress that the United States could default on its debt obligations by June 5. (AP Photo/Jacquelyn Martin / AP Newsroom)

With the outlines of a deal in place, the deal can be drafted and shared with lawmakers in time for votes early next week in the House and later in the Senate.

The deal came together after Treasury Secretary Janet Yellen told Congress that the United States could default on its debt obligations by June 5 — four days later than previously estimated.

FOX News’ Edward Lawrence and the Associated Press contributed to this report.