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.
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".
The US Treasury earlier warned the country would run out of money to pay its bills on 5 June without a deal.
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 $31.4tn (£25tn) 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.
Details of the new deal have not officially been released - but CBS, BBC's partner in America, reported that non-defence government spending would be kept flat for two years and then rise by 1% 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.
At a brief press conference late on Saturday, Mr McCarthy said he had spoken to President Biden on the phone twice during the day.
"And after weeks of negotiations, we have come to an agreement in principle. We still have a lot of work to do, but I believe this is an agreement in principle that's worthy of the American people.
"It has historic reductions in spending, consequential reforms that will lift people out of poverty into the workforce, rein in government overreach, there are no new taxes, no new government programs, there's a lot more within the bill," he said.
Mr McCarthy added that he planned to finish writing the bill on Sunday and speak to President Biden again later in the day, before having a vote in Congress on Wednesday.
In a statement, President Biden said: "The agreement represents a compromise, which means not everyone gets what they want. That's the responsibility of governing.
"And, this agreement is good news for the American people, because it prevents what could have been a catastrophic default and would have led to an economic recession, retirement accounts devastated, and millions of jobs lost".
Both Mr Biden and Mr McCarthy will need to convince members of Congress in their own parties that the deal is a good one before the vote this coming week.
A US default would upend the US economy and disrupt global markets.
In the US, the immediate effect would be that the government would quickly run out of funds to pay for welfare benefits and other support programmes, for instance.
Over a long period, the crisis would top the US economy into recession - and this would result in unemployment rising.
A US recession would have big knock-on effects for many countries around the world, for which the US is a key trading partner - they would not be able to sell to an economy that does not buy as much.
And because the US dollar is the reserve currency of the world, a default would send panic across the world, eventually leading to prices of many commodities rising.