US President Joe Biden and House Speaker Kevin McCarthy at the White House (Photo: AP)

Biden and McCarthy reached an “agreement in principle” to raise the nation’s legal debt ceiling and limit federal spending.

The deal would raise the 31.4-trillion-dollar debt limit for two years while capping spending during that time.

The deal was reached a few days before the US ran out of funds to pay the nation’s bills, but it still needs approval from a divided Congress.

The lawmakers will return to work on Tuesday from their Memorial Day recess and will have 72 hours to consider the deal before voting on it.