Biden, McCarthy square off in debt limit fight
Any compromise would need the support of both Democrats and Republicans to pass in Congress. A federal default on the national debt could plunge the economy into chaos.
WASHINGTON – President Joe Biden said a deal to resolve the government’s debt ceiling crisis appeared “very close” late on Friday, even as the deadline for a potentially catastrophic default has been dropped. push back four days to a week from Monday.
The “X-date” then threatened to usher in another week of nasty negotiations between Republicans in the House and the White House over the risk of a default that could plunge the US economy into chaos and devastate the US economy. decline in world confidence in national leadership.
However, President Joe Biden was upbeat as he left Camp David for Memorial Day weekend, declaring: “It’s very close, and I’m optimistic.”
As Capitol Republicans spoke to Biden’s team at the White House, the president said, “There’s a negotiation going on. I hope we’ll know tonight if we can have a deal.”
The new date, set out in a letter from Treasury Secretary Janet Yellen, comes amid concerns among Americans and the world about America’s state of the brink of war.
In a blunt warning, Yellen said that failure to act before the new deadline would “seriously distress American families, undermine our global leadership and raise questions.” about our ability to protect our national security interests.” Anxious retirees have made backup plans for missed checks, with their next Social Security payments due next week.
The new deadline, one week from Monday, is four days later than previously scheduled. Yellen said all “special measures” that the Treasury Department has used will be exhausted.
Biden and Republican House Speaker Kevin McCarthy appear to be narrowing down a two-year budget-cutting agreement that would also extend the debt limit until the next presidential election. After disappointing closed rounds of negotiations, a compromise appeared to be near on Friday.
Republicans have made some progress in efforts to drastically cut spending that Democrats oppose. However, the parties are particularly “ingrained” in McCarthy’s demands for tougher work requirements for recipients of government food stamps that Democrats consider unwise.
Early Friday, McCarthy said his Republican party debt negotiator and the White House has come to a tense “crisis” time to finalize a deal with Biden as lawmakers take the weekend off for an extended Memorial Day break.
Any deal would need to be a political compromise, with the backing of both Democrats and Republicans to pass divided Congress. Failure to raise the borrowing limit, currently $31 trillion, to pay the nation’s incurred bills, would send shock waves across the United States and the global economy.
However, many Trump hardline Republicans in Congress have long been skeptical of the Treasury’s projections and are pressing McCarthy to stay the course.
Rep. Patrick McHenry, RN.C., one of the negotiators, said the deal is within reach, it just needs to be agreed.
In earlier upbeat remarks at the White House before Yellen’s letter was published, Biden shouted one of these. top negotiator says she is “hopefully arranging a deal.”
He was referring to Office of Management and Budget Director Shalanda Young, who attended the welcome ceremony for the Louisiana State women’s national basketball champions.
While the outlines of the deal have been formed to cut spending for 2024 and impose a 1% cap on spending growth for 2025, the two sides remain stuck on different terms. The debt ceiling, currently at $31 trillion, will be lifted over two years to pay the nation’s rising bills.
A person familiar with the negotiations said the two sides were “digging deep” on whether to agree to Republican demands to impose a tougher line. job requirements for recipients of government food stamps, cash assistance, and healthcare assistance.
House Democrats have called such requests for health care and food aid unwise.
When asked if Republicans were satisfied with the job requirements, Graves raged: “No, no chance.”
Republicans in the House of Representatives pushed the issue to the brink, demonstrating political bravery that ventured out of town for the Memorial Day holiday. Lawmakers are not expected to return to work until Tuesday, but for now their return is uncertain.
“The world is watching,” International Monetary Fund Managing Director Kristalina Georgieva said after Friday’s meeting with Yellen. “Remember we’re in the 12th hour.”
Weeks of negotiations between Republicans and the White House have failed to reach an agreement – in part because the Biden administration has refused to negotiate with McCarthy over a debt limit, arguing that full trust and confidence should not be used. country as leverage to extract other partisan priorities. .
“We have to spend less than last year. That’s the starting point,” McCarthy said.
One idea is to set top budget numbers but then add a “recall” provision to enforce cuts if Congress can’t in the process allocate the annual budget to meet the targets. new.
Regarding work requirements for aid recipients, the White House is particularly opposed to measures that could plunge more people into poverty or take care of their health, a person familiar with the negotiations said. , said the person, who spoke on condition of anonymity to describe the private discussion.
As for the Republican request to rescind funds to the Internal Revenue Service, whether the parties would compromise by allowing funds to be moved into other domestic programs remains an “open matter.”
In a potential development, Republicans could reduce their request to increase defense spending beyond what Biden has proposed in his budget, suggesting instead to keep it at his proposed level, according to a report. others familiar with the negotiations.
The groups are also considering a proposal to increase power transmission line development from Senator John Hickenlooper, D-Colo., to facilitate the construction of the interregional grid.
Meanwhile, McCarthy is feeling pressure from the right wing of the House not to give in to any deal, even if it means passing a Treasury Department deadline.
McCarthy said Donald Trump, the former president running for re-election, told him, “Make sure you get a good deal.”
However, cautious Democrats are also pressing Biden. The top three Democratic leaders in the House of Representatives, led by Rep. Hakeem Jeffries, spoke late Thursday with the White House.
McCarthy has promised lawmakers that he will stick to the rule of posting any bill 72 hours before a vote. The Democratic-held Senate has vowed to move the package quickly to Biden’s desk, just before a likely deadline next Thursday.
Meanwhile, rating agency Fitch rates the US AAA credit at “negative view ratings,” Warning about possible downgrade.
The White House continued to argue that the deficit could be reduced by ending tax breaks for wealthier households and some corporations, but McCarthy said he told the president as early as the February meeting that the Increasing revenue from tax increases is indisputable.
While Biden has ruled out, for now, invoke the 14th Amendment To raise the debt limit on their own, House Democrats announced that they had all signed on to a legislative “removal” process that would force a debt ceiling vote. But they need five Republicans to break with their party and help a majority support the plan.
They will almost certainly recoup around $30 billion in unused COVID-19 funds now that The state of emergency over the pandemic has been officially lifted.
Associated Press writers Mary Clare Jalonick, Stephen Groves, Fatima Hussein, Farnoush Amiri and video reporter Rick Gentilo contributed to this report.