The reviews are starting to come in as details emerge about the debt ceiling agreement reached by United States President Joe Biden and House Speaker Kevin McCarthy.
Even before seeing those details, some lawmakers were criticising the deal as not doing enough to tackle the nation’s debt, while others worried it’s too austere and will harm many low-income Americans.
The legislation will probably need support from a significant number of lawmakers from both parties to clear the closely divided House and gain the 60 votes necessary to advance in the Senate.
Many lawmakers said they were withholding judgement until they see the final details, many which did not come out until Sunday evening. That’s when the 99-page bill that resulted from the Biden-McCarthy negotiations was made public.
With the nation roughly a week away from the risk of a default that could roil the global economy, major business groups have been urging Washington to act quickly on a debt-ceiling increase.
The Business Roundtable, a group of more than 200 chief executive officers, called on Congress to pass the bill as soon as possible.
“In addition to raising the debt ceiling, this agreement takes steps toward putting the US on a more sustainable fiscal trajectory,” said the group’s CEO, Joshua Bolten. “This deal also makes a down payment on permitting reform, helping to clear the path for new energy infrastructure projects.”
The US Chamber of Commerce also urged a yes vote and noted that the vote will be included when the group rates or “scorecards” members of Congress based on how they vote on business priorities.
Economists have been clear that the economy would be roiled with even a short-term breach in the nation’s ability to fully pay its bills as interest rates would rise and financial markets swoon.
“The gravity of this moment cannot be overstated,” said Suzanne Clark, the business group’s president and CEO.
Some advocacy groups have long warned of the propensity of Congress to enact policy priorities without fully paying for them. Their concerns generally go unheeded. But some see the agreement as a step in the right direction.
The Committee for a Responsible Federal Budget noted that if the legislation passes, it would be the first major deficit-reducing budget agreement in almost a dozen years.
“The process was tense, risky and ugly, but in the end, we have a plan to enact savings and lift the debt ceiling, and that is what is needed,” said Maya MacGuineas, the group’s president.
With days to spare, Biden and McCarthy reached final agreement Sunday on a deal to raise the US debt ceiling by the June 5 deadline to avert a damaging federal default.
“Good news,” Biden declared Sunday evening at the White House.
“The agreement prevents the worst possible crisis, a default, for the first time in our nation’s history,” he said. “Takes the threat of a catastrophic default off the table.”
The final product includes spending cuts.
In the United States, a default could cause financial markets to freeze up and spark an international financial crisis. Analysts say millions of jobs would vanish, borrowing and unemployment rates would jump, and a stock market plunge could erase trillions of dollars in household wealth. It would all but shatter the US$24 trillion market for Treasury debt.
McCarthy has promised lawmakers he will abide by the rule to post any bill for 72 hours before voting in the House, as soon as Wednesday.
The package would next go to the Senate, where Republican leader Mitch McConnell said senators “must act swiftly and pass this agreement without unnecessary delay.”
Central to the compromise is a two-year budget deal that would essentially hold spending flat for 2024, while boosting it for defence and veterans, and capping increases at one per cent for 2025. That’s alongside raising the debt limit for two years, pushing the volatile political issue past the next presidential election.