US President Joe Biden on Sunday finalized a budget agreement with House Speaker Kevin McCarthy to suspend the $31.4 trillion debt ceiling until January 1, 2025, and said the deal was ready to move to Congress for a vote.
"This is a deal that's good news for the American people," Biden told reporters at the White House after a call with McCarthy to put the final touches to a tentative deal they struck on Saturday night.
"It takes the threat of catastrophic default off the table, protects our hard-earned and historic economic recovery."
The deal, if approved, will prevent the US government from defaulting on its debt and comes after weeks of heated negotiations between Biden and House Republicans.
It still needs to pass through a narrowly divided Congress before June 5, when the US Treasury says it would run short of money to cover all of its obligations.
"I strongly urge both chambers to pass that agreement," Biden said, adding that he expected McCarthy to have the necessary votes for the deal to pass.
The deal has drawn fire from hardline Republicans and progressive Democrats, but Biden and McCarthy are banking on getting enough votes from both sides.
McCarthy earlier on Sunday predicted he would have the support of a majority of his fellow Republicans, and House Democratic leader Hakeem Jeffries said he expected Democratic support.
The agreement would suspend the debt limit through January 1 of 2025, cap spending in the 2024 and 2025 budgets, claw back unused COVID funds, speed up the permitting process for some energy projects and include extra work requirements for food aid programs for poor Americans.
The 99-page bill would authorize more than $886 billion for security spending in fiscal year 2024 and over $703 billion in non-security spending for the same year, not including some adjustments. It would also authorize a 1 per cent increase for security spending in fiscal year 2025.
Senate Republican Leader Mitch McConnell applauded the agreement and called on the Senate to act swiftly to pass it without unnecessary delay once it has gone through the House.
"Today’s agreement makes urgent progress toward preserving our nation’s full faith and credit and a much-needed step toward getting its financial house in order," McConnell said.
Members of the Republican hardline Freedom Caucus said they would try to prevent the agreement from passing in a House vote expected on Wednesday.
"We're going to try," Representative Chip Roy, a prominent Freedom Caucus member, said in a tweet.
McCarthy dismissed threats of opposition within his own party, saying "over 95%" of House Republicans were "overwhelmingly excited" about the deal.
"This is a good strong bill that a majority of Republicans will vote for," the California Republican told reporters in the US Capitol. "You're going to have Republicans and Democrats be able to move this to the president."