US Democratic President Joe Biden said Sunday that a budget deal reached with Republican House Speaker Kevin McCarthy to suspend the debt ceiling was finalized and ready for a congressional vote.  

The deal would allow the country to avoid defaulting on its debts ahead of an estimated June 5 deadline. A default would have drastic impacts on both the US and global economy.

Biden: Deal is 'good news' for Americans

Speaking to reporters at the White House after putting the final touches to the deal, which was "tentatively" announced a day before, Biden described the bipartisan deal as "good news" for Americans. 

"It takes the threat of catastrophic default off the table, protects our hard-earned and historic economic recovery," he said.

The deal must now go through the US Republican-controlled House and Democratic-majority Senate for a vote. Biden "strongly urged" both chambers to pass it. 

McCarthy said on Sunday that he believes he has enough support from members of his party in the House to pass the agreement. 

Why is the deal significant?

This comes after a long standoff as both Democrats and Republicans played hardball in the final race for a deal ahead of a critical June 5 deadline. Reaching a deal was imperative for the US to avoid a downgraded credit rating, likely recession and potentially millions of job losses.

US Republicans have been vying for a two-year budget deal that would hold spending flat for 2024 and impose limits for 2025 in exchange for raising the debt limit for two years, pushing the volatile political issue past the next presidential election.

Democrats, on the other hand, were adamant that the ceiling should be raised without any strings attached.

What's in the agreement? 

The deal would suspend the $31.4 trillion (€29.3 trillion) debt ceiling through January 1, 2025, in exchange for a cap on spending in the 2024 and 2025 budgets, among other spending cuts.

It would also authorize over $886 billion for security spending for 2024, in addition to over $703 billion in non-security spending.

Although the deal will likely receive broad bipartisan support from lawmakers, there has also been opposition to the agreement.  

Both conservative Republicans and progressive Democrats have rejected the deal. The former argued more spending cuts should have been included, whereas the latter wanted no cuts at all.

rmt/wd (AFP, Reuters)