Failure to raise the debt ceiling would lead to default that would shake the U.S. and world economies. McCarthy said the package would lower spending by $4.5 trillion over the coming 10 years. Biden reiterated his position that Congress should raise the $31.4 trillion debt limit without conditions, as it did three times under his Republican predecessor, Donald Trump. POTENTIAL CONSEQUENCESThe nonpartisan Committee for a Responsible Federal Budget praised McCarthy's plan as a "realistic and extremely welcome first step." A lengthy 2011 standoff over the debt ceiling led to a first-ever downgrade of the federal government's credit rating, which rattled markets and raised borrowing costs.

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