US President Joe Biden and House Majority Leader Representative Kevin McCarthy have allegedly agreed to raise the federal government’s enormous debt ceiling.

According to the Reuters report shared on May 28th, the “agreement in principle” was discussed during a phone call between Biden and McCarthy.

Did you know?

Want to get smarter & wealthier with crypto?

Subscribe – We publish new crypto explainer videos every week!

The tentative agreement, reached after a 90-minute conversation between the two leaders, seeks to address the looming $31.4 trillion debt crisis.

While complete details of the agreement are not yet available, a Reuters report suggests that the deal limits government spending for the next two years, excluding national security costs.

A source close to the matter revealed that “negotiators have agreed to cap non-defense discretionary spending at 2023 levels for one year and increase it by 1% in 2025.”

Following the negotiation, Biden took to Twitter to acknowledge the agreement, pointing out that it would avert a “catastrophic default” by the US government.

Biden also stated that the deal would soon be sent to the House of Representatives and Senate, urging both chambers to approve the agreement without delay.

In addition to Biden, McCarthy also confirmed the proposed agreement on Twitter, taking a jab at Biden for what he considered to be a delay in negotiations. 

The debt ceiling concerns were raised by US Treasury Secretary Janet Yellen, who warned about a possible default by June 1st. The US Congressional Budget Office echoed this sentiment in a May 12th report, emphasizing the risk of the government’s inability to meet its obligations if the debt limit isn’t modified.

The potential rise of the debt ceiling has led many analysts to suggest that this could lead to increased capital inflow into Bitcoin (BTC). For instance, former Wall Street trader MacroJack emphasized the importance of owning hard assets as the dollar continues to be devalued, advocating for Bitcoin as the “fastest horse in the race.”

As the US government grapples with an enormous debt burden, the alleged agreement between Biden and McCarthy presents a potential path towards averting a financial crisis.