Washington, May 28 : The White House and the Republicans have agreed in principle to raise the US debt ceiling and avert a default after weeks of bitter negotiations, local media reported. The deal still needs to be approved by a divided US Congress. President Joe Biden described the agreement as a "compromise", while House Speaker Kevin McCarthy said it "has historic reductions in spending", BBC reported. The US Treasury earlier warned the country would run out of money to pay its bills on June 5 without a deal, BBC reported. Such a default would upend the US economy and disrupt global markets. The US must borrow money to fund the government because it spends more than it raises in taxes. Republicans have been seeking spending cuts in areas such as education and other social programmes in exchange for raising the $31.4 trillion debt limit, a law that caps how much debt the US government can accrue. Senior party members have said they will not raise the debt ceiling unless the government reduces its spending in the years ahead, while Democrats have countered with proposals to raise certain taxes, BBC reported. Details of the new deal have not officially been released - but CBS reported that non-defence government spending would be kept flat for two years and then rise by 1 per cent in 2025. There would be no major changes to Medicaid health insurance, CBS reported. It was unclear how exactly a government programme that provides food-purchasing assistance for people on low or no incomes would change, according to the report. /IANS