White House and Republican negotiators reached a deal late on Saturday to raise the U.S. debt ceiling, thereby averting a default that would have sent shockwaves across the global economy had a deal not been reached by the June 1 deadline.
President Joe Biden and House Speaker Kevin McCarthy sealed the deal during a 90-minute telephone call. The pair will now be responsible for drafting a legislative framework that will be used to legally enforce the agreement despite protests from the more radical wings of both the Democratic and Republican parties.
In addition to suspending the debt limit through 2025, the deal includes a two-year appropriations agreement to keep non-defense spending relatively unchanged.
Prior to the confirmation of the deal, economists feared that even a short-term default on the U.S. government’s loans could potentially lead to significant market declines and the loss of thousands of jobs.