Party Leaders Reach Tentative Deal on Raising Debt Ceiling — Now Congress Has to Get on Board

President Biden and Speaker McCarthy came to an agreement on how to move forward with raising the debt ceiling before the U.S. defaults. They just need to get their parties on board with making some compromises

Republican House Speaker Kevin McCarthy on Saturday evening announced that he and President Joe Biden had reached a tentative deal on raising the debt ceiling for two years, offering hope of averting the economic catastrophe that would come with a default.

The challenge now comes in convincing enough members in both the House and Senate to get behind the deal, which contains provisions that are sure to upset both parties. The White House and congressional party leaders are working fast to lobby members and receive enough support for passage in both chambers, with little time to spare.

RELATED: We Explain the Debt Ceiling — and How Defaulting Would Impact You — in Less Than 5 Minutes

Biden, McCarthy, and other congressional leaders met numerous times in recent weeks to discuss a plan that would make both political parties comfortable in deciding to raise the debt ceiling, which is the total amount of money that the federal government is authorized to borrow to meet its existing legal obligations.

The treasury secretary had been warning Congress that the U.S. was on track to default on its debts as early as June 1 if they could not reach an agreement to raise the borrowing limit, meaning the federal government would run out of money to spend on vital programs. Anyone receiving any sort of payment from the federal government — Social Security payments, military and veterans benefits, food stamp payments, etc. — would no longer receive those benefits in that case.

Republicans, led in negotiations by McCarthy, had said previously that they would reject any short-term increase of the debt ceiling without negotiating government spending cuts (on things like immigration and changes to food stamp programs) to help turn the debt cycle around. But some cuts were seen as unacceptable to Democrats, with even Biden himself signaling that negotiations had stalled for a while, calling Republicans' early proposals "simply, quite frankly, unacceptable."

The U.S. has never defaulted on its debt before, and the impact of a default would have reverberated throughout the global economy. "There will be no acceptable outcomes if the debt ceiling isn't raised, regardless of what decisions we take," Treasury Secretary Janet Yellen said in a recent interview with NBC.

With a deal within reach, members of the U.S. House and Senate are now tasked with getting behind the legislation that raises the borrowing limit so that Biden can sign it into law and prevent further economic harm.

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