President Joe Biden and House Speaker Kevin McCarthy have a tentative agreement that will raise the debt ceiling and end their standoff just days before a possible US default.

The deal, if enacted, will boost the nation's borrowing limit for two years and take the full faith and credit of the US off the negotiating table through the next presidential election, according to a person familiar with the details.

That gives politicians and markets an extended breather on an issue that regularly threatens economic chaos.

McCarthy and Biden will now face the task of getting it passed into law before June 5, when Treasury Secretary Janet Yellen says the government may run out of money to pay all its bills. Lawmakers on both the left and right immediately raised concerns about some of the compromises.

The details of the deal are still emerging. What is already clear is that it proposes an array of changes to how the government operates.

There would be new limits on government spending, new requirements around accessing government assistance and some cuts in red tape associated with energy projects.

Here’s what we know so far:

Spending

At the center of this deal is an agreement on government spending.

This issue nearly derailed the talks. The two sides were at loggerheads over a GOP demand to roll back increases in discretionary government spending that were approved by Congress late last year just before Republicans took control of the House of Representatives.

In the end, Biden and McCarthy agreed to keep overall non-defense spending largely at current levels into next year. Then, in 2025, there will be a small 1% increase in spending.

McCarthy described the new limits Saturday - which includes cuts in certain areas - as "historic."

The two sides were able to make the math work, according to the person familiar with the talks, thanks to appropriations adjustments that will lead to cuts in some key areas but not as much as Republicans had initially demanded.

The two-year deal also only sets broad spending outlines, ensuring much more debate in the months ahead about which programs will face shortfalls. Nevertheless, it appears to take off the table a possible government shutdown that had been on tap for later this year.

Military spending - politically popular on both sides of the aisle - is largely excluded. This deal will increase the Pentagon’s budget.

The delicate line struck by negotiators has already proven deeply unpopular with the most conservative and the most liberal lawmakers in both parties.

Rep. Bob Good (R-VA) immediately took aim at the deal Saturday on Twitter, saying “no one claiming to be a conservative could justify a YES vote.”

But the budget hawks at the Committee for a Responsible Federal Budget immediately praised the deal, with its president Maya MacGuineas saying "the process was tense, risky and ugly, but in the end, we have a plan to enact savings and lift the debt ceiling, and that is what is needed."

Work requirements and social programs

Another thorny issue that remained unresolved until the very last hours was what work requirements would be required in return for access to government assistance such as food stamps and the Temporary Assistance for Needy Families (TANF) program.

This deal will make changes to what some Americans need to access those two programs. They are changes that McCarthy said Saturday would “lift Americans out of poverty and into the workforce.”

Many of the details remained unclear Sunday morning. Medicaid - another assistance program where changes were considered - will not being impacted.

According to PunchBowl News, McCarthy told his caucus behind closed doors Saturday that the final requirements are "a little stronger" than even what Republicans had passed in their debt-ceiling proposal in March.

On the other side, the President Biden argued in a statement that that the deal “reduces spending while protecting critical programs for working people.”

The idea of tougher work requirements is a sensitive issue for both parties but especially for liberal Democrats who argue that any increased requirements will do little for the deficit and be needlessly cruel for the most vulnerable Americans.

Rep. Pramila Jayapal (D-WA), who leads the 100 most progressive members of the House, said last week that her members "are not going to take a deal that hurts working people."

Biden, in his statement, acknowledged that some of his colleagues may be unhappy saying "agreement represents a compromise, which means not everyone gets what they want."

Energy projects and student loans

There were additional compromises as well as some issues that ended on the cutting-room floor.

Permitting reform is addressed, apparently in a limited way. Industry groups and lawmakers have long complained about the mountains of government red tape that often stand in the way of energy projects.

The deal appears to provide modest changes to the National Environmental Policy Act, a 1970 law that allows the federal government to analyze environmental impacts of proposed projects. The aim is to streamline the government's review process for energy projects in the years ahead but the full provisions - as well as other key details - have not yet been formally released.

Powerful Sens. Joe Manchin (D-WV) and John Barasso (R-WY) are also aiming to produce a more comprehensive bipartisan deal on the permitting reform issue this summer.

Manchin recently said “no matter what you want to build, it simply takes too long,” citing both effort to build out America’s clean energy infrastructure and efforts by fossil fuel companies to extract oil and natural gas.

One issue that appears not to be addressed in a significant way: green energy tax credits. Republicans wanted to repeal the credits that were a part of Biden's Inflation Reduction Act last year, claiming they were market distorting.

President Biden touted Saturday how "the agreement protects my and Congressional Democrats’ key priorities and legislative accomplishments."

The deal also doesn't appear to include White House ideas for raising additional revenue through closing tax loopholes that could have impacted tax bill in industries like energy and cryptocurrency. McCarthy said Saturday the deal has "no new taxes."

Another issue left on the cutting room floor: student loans.

Republicans had initially aimed to use the debt ceiling debt to cancel Biden's effort to forgive debt. But the GOP ended up backing down, knowing that there is ongoing litigation that could lead the Supreme Court to cancel the effort in the months ahead anyway.

McCarthy signaled early in the negotiations he would be willing to let that be an issue decided in the courts.

“I believe this is an agreement in principle that is worthy of the American people," the Speaker said Saturday night.

Ben Werschkul is Washington correspondent for Yahoo Finance.

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