US Congress inches closer to deal before holiday weekend

US President Joe Biden and top Republican Kevin McCarthy have made progress in talks over raising the US debt ceiling. The goal is to reach a two-year deal that allows the government to continue paying its bills. Despite assurances of progress, investors remain concerned about the possibility of the US defaulting on its debts. President Biden has mentioned productive conversations with McCarthy and emphasized that defaulting on national debt is not an option.

The debt ceiling, a spending limit determined by Congress, has been a point of disagreement between Democrats and Republicans. If no deal is reached, the Treasury warns that the US may not have enough funds to cover its expenses by June 1. Reports suggest a potential pact could include spending cuts and strict caps on spending, excluding military or veterans programs. Republicans seek spending cuts in exchange for raising the government borrowing cap.

Any agreement reached will need to be translated into legislative text and approved by Congress. McCarthy has pledged to provide lawmakers with ample time to review the bill before voting. The Senate and the White House would also need to approve the bill. Alternatively, lawmakers could temporarily lift the debt cap to allow for more time in the negotiations.

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