Slimmed-down US debt ceiling deal takes shape, sources say

US President Joe Biden and top Republican lawmaker Kevin McCarthy are edging close to a deal on the US debt ceiling, with the parties just US$70 billion (about RM324 billion) apart on discretionary spending, according to a person familiar with the talks.

What is likely to emerge will not be a hundreds-page long bill, something that could take lawmakers days to write, read and vote on, but a slimmed-down agreement with a few key numbers, this source and another person briefed on negotiations said.

The expectation is that negotiators will hammer out top line numbers for discretionary spending, including a number for military spending, but leave lawmakers to hammer out the fine details of categories like housing and education through the normal appropriations process in the months ahead, the second source said.

In 2022, US discretionary spending reached US$1.7 trillion, accounting for 27% of the overall US$6.27 trillion spent, according to federal figures. About half of that was for defense, an area some lawmakers have said should not be cut.

The end result would likely just put guardrails on future budget talks, not spell out detailed spending, sources said.

The White House declined to comment.

On Wall Street, the S&P 500 rose less than a percent, US Treasury bonds fell in price and the US dollar scaled to its highest levels since March as markets digested more optimistic-sounding news on the debt limit from Washington.