What is in the US debt ceiling deal?

The bipartisan deal agreed by US president Joe Biden and Republican House Speaker Kevin McCarthy has one main purpose: to stop America from defaulting on its debt in early June, when the Treasury is projected to run out of cash to pay all its bills. Here are the key provisions of the fiscal pact as it heads to Congress for voting.

The legislation raises the US’s $31.4tn debt ceiling for two years. Technically, it is a suspension of the borrowing limit until 2025, but the effect will be the same, removing the threat of a self-inflicted default until at least after next year’s US presidential and congressional elections.

The deal applies to domestic discretionary spending, setting caps for the next two years. In the 2024 fiscal year, spending levels will have to be flat, and they can only rise by 1 per cent in the 2025 fiscal year. Republicans had wanted deeper cuts for longer but still argue such fiscal restraint is significant. Notably, the spending limits do not include the defence budget or outlays for Social Security, the government pension scheme, or Medicare, the government healthcare scheme.