Crypto Market Turns Green as House Republicans and White House Strike Tentative Deal to Avert Debt Default
House Republicans and the White House have reportedly reached a tentative deal to address the nation’s debt ceiling and avoid a catastrophic default on U.S. sovereign debt. After more than a week of urgent talks, negotiators from both sides have come to an agreement that will be relayed to GOP members in an all-member call. While a senior Democratic aide stated that a deal is “very close” and could be announced soon, there are still some details being finalized, NBC News reports.
The crypto market immediately reacted to the news, with the price of Bitcoin rising from $26,700 to $27,150 at the time of writing. Ethereum (ETH) also saw an increase, reaching $1,860. Litecoin (LTC) is currently trading at $90, and Solana (SOL) experienced a 7% surge in the past 24 hours, reaching $20.8.
The announcement of this potential deal came as a surprise to officials in Washington, as many House and Senate members were out of town for Memorial Day. President Joe Biden had left the city to spend the weekend at Camp David. However, the urgency of the situation and the Treasury Department’s recent guidance on the government’s lack of funds after June 5 likely prompted the swift action.
Treasury Secretary Janet Yellen had warned that without raising the debt limit, the government would not have enough resources to meet its obligations. The Treasury is scheduled to make significant payments and transfers in the first week of June, leaving it with an extremely low level of resources. Raising the debt limit would not authorize additional spending but would allow the Treasury to meet the obligations already approved by Congress.
Republicans have used the debt ceiling vote as an opportunity to extract concessions from Democrats in the past, and this time was no different. They demanded baseline government spending cuts, new work requirements for public assistance, energy permitting reform, and the rescinding of unspent Covid emergency funds. The White House initially resisted many of these demands, leading to intense negotiations over the past two weeks.
The agreement reached between House Republicans and the White House marks the beginning of a lobbying effort by leaders in both parties to secure enough votes in the GOP-controlled House and Democratic-held Senate. The package needs to be approved before the June 5 deadline to raise the debt ceiling.
However, some potential roadblocks remain. Utah Republican Senator Mike Lee has threatened to use procedural maneuvers to delay the debt ceiling bill if he is not satisfied with its content. Additionally, a group of 35 ultraconservative House members has publicly pressured House Speaker Kevin McCarthy to demand further concessions from Democrats.
As details of the agreement emerge, it remains to be seen how House and Senate members will respond to the proposed deal. The next steps will involve rallying support and convincing members from both parties to vote in favor of raising the debt ceiling. The consequences of failing to reach an agreement would be dire, potentially leading to a catastrophic default on U.S. sovereign debt, which could have severe repercussions for the economy and financial markets.
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