By Steve Holland, Gram Slattery and Katharine Jackson
WASHINGTON (Reuters) -U.S. President Joe&nbsp;Biden&nbsp;and top congressional Republican Kevin&nbsp;McCarthy&nbsp;reached a&nbsp;tentative&nbsp;deal&nbsp;to suspend the federal government's $31.4 trillion&nbsp;debt&nbsp;ceiling&nbsp;on Saturday evening, ending a months-long stalemate.
However, the&nbsp;deal&nbsp;was announced without any celebration, in terms that reflected the bitter tenor of the negotiations and the difficult path it has to pass through Congress before the United States runs out of money to pay its&nbsp;debts in early June.
"I just got off the phone with the president a bit ago. After he wasted time and refused to negotiate for months, we've come to an agreement in principle that is worthy of the American people,"&nbsp;McCarthy&nbsp;tweeted.
Biden&nbsp;called the&nbsp;deal&nbsp;"an important step forward" in a statement, saying: "The agreement represents a compromise, which means not everyone gets what they want. That&rsquo;s the responsibility of governing." &nbsp;
The&nbsp;deal&nbsp;would suspend the&nbsp;debt&nbsp;limit through January of 2025, while capping spending in the 2024 and 2025 budgets, claw back unused COVID funds, speed up the permitting process for some energy projects and includes some extra work requirements for food aid programs for poor Americans.
After months of back-and-forth, the&nbsp;tentative&nbsp;agreement came together in a flurry of calls.&nbsp;Biden&nbsp;and&nbsp;McCarthy&nbsp;held a 90-minute phone call earlier on Saturday evening to discuss the&nbsp;deal,&nbsp;McCarthy&nbsp;briefed his members later in the evening, and the White House and the House leader spoke afterward.
"We still have more work to do tonight to finish the writing of it,"&nbsp;McCarthy&nbsp;told reporters on Capitol Hill.&nbsp;McCarthy&nbsp;said he expects to finish writing the bill on Sunday, then speak to&nbsp;Biden&nbsp;and have a vote on the&nbsp;deal&nbsp;on Wednesday.
Biden&nbsp;and&nbsp;McCarthy&nbsp;have to carefully thread the needle in finding a compromise that can clear the House, with a 222-213 Republican majority, and Senate, with a 51-49 Democratic majority -- meaning it will need bipartisan support before the president can sign it.
Negotiators have agreed to cap non-defense discretionary spending at 2023 levels for one year and increase it by 1% in 2025, a source familiar with the&nbsp;deal&nbsp;said.
"It has historic reductions in spending, consequential reforms that will lift people out of poverty into the workforce, rein in government overreach&nbsp;- there are no new taxes, no new government programs,"&nbsp;McCarthy&nbsp;said.
The&nbsp;deal&nbsp;will avert an economically destabilizing default, so long as it succeeds in passing it through the narrowly divided Congress before the Treasury Department runs short of money to cover all its obligations, which it warned on Friday will occur if the&nbsp;debt&nbsp;ceiling&nbsp;issue was not resolved by June 5.
Republicans who control the House of Representatives have pushed for steep cuts to spending and other conditions, and were sharply critical of the&nbsp;deal&nbsp;as early details were reported.
Republican Representative Bob Good, a member of the conservative House Freedom Caucus, tweeted that he was hearing the&nbsp;deal&nbsp;would raise the&nbsp;debt&nbsp;by $4 trillion, and added "IF that is true, I don&rsquo;t need to hear anything else. No one claiming to be a conservative could justify a YES vote."
North Carolina's Dan Bishop described the&nbsp;deal&nbsp;earlier Saturday as "utter capitulation in progress. By the side holding the cards."
One high-ranking member of the House Freedom Caucus&nbsp;said they were in the process of gauging member sentiment, and unsure what the vote numbers might be.
TAXES VS. SPENDING CUTS
Republicans say they want to cut spending to slow the growth of the U.S.&nbsp;debt, which is now roughly equal to the annual output of the country's economy.&nbsp;Biden&nbsp;and Democrats have pushed to increase taxes on the wealthy and companies to shrink the&nbsp;debt&nbsp;while increasing spending on programs like free community college.
The long standoff on raising the&nbsp;debt&nbsp;ceiling&nbsp;spooked financial markets, weighing on stocks and forcing the United States to pay record-high interest rates in some bond sales. A default would take a far heavier toll, economists say, likely pushing the nation into recession, shaking the world economy and leading to a spike in unemployment.
Biden&nbsp;for months refused to negotiate with&nbsp;McCarthy&nbsp;over future spending cuts, demanding that lawmakers first pass a "clean"&nbsp;debt-ceiling&nbsp;increase free of other conditions, and present a 2024 budget proposal to counter his budget issued in March.
Two-way negotiations between&nbsp;Biden&nbsp;and&nbsp;McCarthy&nbsp;began in earnest on May 16.
The work to raise the&nbsp;debt&nbsp;ceiling&nbsp;is far from done.&nbsp;McCarthy&nbsp;has vowed to give House members 72 hours to read the legislation before bringing it to the floor for a vote.
That will test whether enough moderate members support the compromises in the bill to overcome opposition from both hard-right Republicans and progressive Democrats to&nbsp;reach&nbsp;a simple majority vote.
Then it will need to pass the Senate, where it will need at least nine Republican votes to succeed. There are numerous&nbsp;opportunities in each chamber along the way to slow down the process.
(Reporting by Moira Warburton, Steve Holland and Katharine Jackson; Writing by Andy Sullivan; Editing by Scott Malone, Frances Kerry, Daniel Wallis, Heather Timmons, Dave Gregotio, Chizu Nomiyama and Kim Coghill)

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Biden, McCarthy reach tentative US debt ceiling deal