McCarthy defends debt deal amid pushback from hardline Republicans

Earlier on Tuesday, hardline House Freedom Caucus members held a news conference to attack the agreement, which they said did little to address the US debt problem or rein in government spending.

"When the Freedom Caucus talked about want[ing] the spending back to 2022 [levels]," McCarthy told reporters, "the non-defence [portion] is back lower than 2022."

A vote in the House on the debt deal could come as soon as Wednesday night if procedural obstacles are overcome, but several far-right Republican members have said they will not support it.

Top House Democrat Hakeem Jeffries said his caucus would provide votes to help pass the bill through the chamber, which Republicans control by a 222-213 margin.

"[I am] confident that we will avoid a catastrophic default," Jeffries told reporters on Capitol Hill.

If the deal passes the House, a Senate vote could possibly stretch into the weekend if lawmakers in that chamber try to slow its passage. At least one, Republican Mike Lee, has said he may try to do so.

The bill would suspend the US debt limit through Jan. 1, 2025, allowing Biden and lawmakers to set aside the politically risky issue until after the November 2024 presidential election.

It would also cap some government spending over the next two years, speed up the permitting process for some energy projects, claw back unused Covid-19 funds, and introduce work requirements for food aid programs for some poor Americans.

"The thing that's very interesting here is the largest savings in American history," said McCarthy, when asked about the hard-liners' concerns, "the unshackling of - finally - wasteful Washington spending getting rescinded."

Biden can point to gains as well. The deal leaves his signature infrastructure and green-energy laws largely intact, and the spending cuts and work requirements are far less than Republicans had sought.

Republicans have argued that steep spending cuts are necessary to curb the growth of the national debt, which at $31.4 trillion is roughly equal to the annual output of the economy.

The Treasury has estimated that the debt ceiling must be raised or suspended by June 5th to stop the nation from running out of money to pay its bills and falling into default, which many fear could prove catastrophic for the US economy.

"The best deal is no deal" -hardline Republicans slam agreement to avoid US default

Right-wing Republicans on Tuesday said they vehemently oppose a bipartisan deal to raise the US debt ceiling before the United States potentially runs out of money to pay its bills.

At a news conference on Capitol Hill, members of the House Freedom Caucus called on fellow Republicans to reject the plan - hammered out by President Joe Biden and House Speaker Kevin McCarthy- because, they said, it does too little to cut spending in exchange for suspending the nation's current $31.4 trillion borrowing limit.

"The Speaker himself has said on numerous occasions the greatest threat to America is our debt," said Freedom Caucus Chairman Rep. Scott Perry. "And this deal, this deal fails, fails completely. And that's why these members and others will be absolutely opposed to the deal. And we will do everything in our power to stop it."

Both Biden and McCarthy have predicted they will get enough votes to pass it into law before June 5, when the US Treasury Department says it will not have enough money to cover its obligations.

"Let's call their bluff on it," said Representative Ralph Norman, another caucus member, "the best deal is no deal."

Norman is one of three conservatives on the 13-member House Rules Committee who could potentially torpedo the bill before it even reaches the House floor. But a successful vote there would set up a vote by the full House on Wednesday evening.

"We had a real opportunity to significantly cut federal spending, restore some fiscal sanity to Washington, DC, and get our economy back on track," said Colorado Rep. Lauren Boebert. "Unfortunately, the bill we are considering tomorrow does none of these things and is more Washington gimmicks from the swamp that kicks the proverbial can down the road."

Most of the savings would come by capping spending on domestic programs like housing, border control, scientific research and other forms of "discretionary" spending. Military spending would be allowed to increase over the next two years.

The debt-ceiling standoff prompted rating agencies to warn they might downgrade U.S. debt, which underpins the global financial system. Markets have reacted positively to the agreement so far.

Reuters