White House and Republican negotiators reached a tentative deal to raise the US debt ceiling and avert a default that threatened to send tremors through the global economy, according to people familiar.

President Joe Biden and House Speaker Kevin McCarthy must now shepherd the framework deal, negotiated in extended discussions, to final legislative passage over the objections of hardline lawmakers in both parties. There’s little margin for error, with Treasury Secretary Janet Yellen warning that an extension must be finalized by June 5 to avoid a historic default that would send borrowing costs soaring.

The deal includes a two-year debt limit increase and a two-year appropriations agreement that keeps non-defense spending roughly flat with current levels, a person familiar with the deal said, speaking on condition of anonymity.

Economists warned even a short default could see dramatic market declines and the loss of hundreds of thousands of jobs. On May 24, Fitch Ratings placed the US’s AAA credit rating on watch in a move that reflected the mounting concerns the US would go over the brink.

Although the tense negotiations put the country on edge, the agreement could bolster both Biden and McCarthy politically, assuming it garners enough support on Capitol Hill.

For McCarthy, skepticism that he would be able to negotiate an agreement given his razor-thin advantage in the House has hung over the speakership he won in a 15-vote runoff early this year. McCarthy arranged for a call with fellow House Republicans for 9:30 p.m. in Washington.

The compromise, however, could also provoke an attempt by a handful of conservative lawmakers to call a vote to oust him.

The president, at the same time, sidesteps the biggest threat to the post-pandemic economic recovery as he seeks a second term. Yet meeting some GOP demands also risks alienating progressives he needs to propel his reelection campaign.

White House budget director Shalanda Young, senior adviser Steve Ricchetti, and legislative affairs director Louisa Terrell crafted the deal with Representatives Garret Graves, a Louisiana Republican, Patrick McHenry, a North Carolina Republican, and McCarthy’s chief of staff, Dan Meyer.

--With assistance from Erik Wasson, Laura Litvan and Justin Sink.

(Adds details fo the deal throughout)