WASHINGTON: President Joe Biden and House Speaker Kevin McCarthy reached an “agreement in principle” to raise the nation’s legal debt ceiling late Saturday as they raced to strike a deal to limit federal spending and avert a potentially disastrous US default.

Support from both parties will be needed to win congressional approval next week before a June 5 deadline.

The Democratic president and Republican speaker reached the agreement after the two spoke earlier Saturday evening by phone, said McCarthy.

“The agreement represents a compromise, which means not everyone gets what they want,” Biden said in a statement late Saturday night. “That’s the responsibility of governing,” he said.

Central to the package is a two-year budget deal that would hold spending flat for 2024 and impose limits for 2025 in exchange for raising the debt limit for two years, pushing the volatile political issue past the next presidential election.

The agreement would limit food stamp eligibility for able-bodied adults up to age 54, but Biden was able to secure waivers for veterans and the homeless.

The two sides had also reached for an ambitious overhaul of federal permitting to ease the development of energy projects and transmission lines. Instead, the agreement puts in place changes in the National Environmental Policy Act that will designate “a single lead agency” to develop economic reviews in hopes of streamlining the process.

The deal came together after Treasury Secretary Janet Yellen told Congress that the United States could default on its debt obligations by June 5 — four days later than previously estimated — if lawmakers did not act in time to raise the federal debt ceiling.

Both sides have suggested one of the main holdups was the Republican effort to expand work requirements for recipients of food stamps and other federal aid programs, a longtime goal that Democrats have strenuously opposed.

Biden has said the work requirements for Medicaid would be a nonstarter. He seemed potentially open to negotiating minor changes on food stamps, now known as the Supplemental Nutrition Assistance Program despite objections from rank-and-file Democrats.

Americans and the world were uneasily watching the negotiating brinkmanship that could throw the US economy into chaos and sap world confidence in the nation’s leadership.

Anxious retirees and others were already making contingency plans for missed checks, with the next Social Security payments due next week.

Yellen said failure to act by the new date would “cause severe hardship to American families, harm our global leadership position and raise questions about our ability to defend our national security interests.”

The president, spending part of the weekend at Camp David, continued to talk with his negotiating team multiple times a day, signing off on offers and counteroffers.