Bloomberg learned the details of a possible US government debt deal

White House and GOP negotiators are moving closer to an agreement on a debt ceiling and a two-year federal spending cap, according to Bloomberg.

Over the past few days, the parties have reduced their differences, but there is no final decision yet. The main details of the agreement remain preliminary. An important topic for discussion remains the scope of spending restraints. President Joe Biden's administration has defended a 3% increase in defense spending in 2024, as proposed by Biden. The Republicans secured an agreement to speed up the approval process for pipelines and other fossil energy projects. The agreement will also upgrade the US electrical grid to use renewable energy sources. In addition, the Republicans reached an agreement to cut a $10 billion increase in the U.S. Internal Revenue Service budget, which was originally planned to increase by $80 billion.

Republicans originally proposed raising the debt ceiling until March 2024 in exchange for a 10-year government spending cap, but a two-year spending cut is now under discussion. The parties are aware of the areas in which there are disagreements, and although there is no agreement yet, work continues. House Speaker Kevin McCarthy said work will continue until an agreement is fully reached.

Reports of progress in negotiations led to a slight increase in US Treasury bond yields. Stocks in Japan and South Korea saw gains, while major indexes in Australia showed little change. Goldman Sachs analysts Jan Hatzius and Alek Philips noted that now the chances of reaching an agreement are the highest for all the time of the negotiations. If the deal is struck quickly, a vote in the House of Representatives is likely to take place on May 30 so that the document can reach the president by June 1, the deadline set by the US Treasury Department.