Debt ceiling negotiators race to cement final deal before deadline
May 26, 2023 Updated Fri., May 26, 2023 at 9:29 a.m.
Congressional Republicans and the White House were still racing Friday to head off a catastrophic default, as negotiations on an agreement to raise the debt ceiling before the government runs out of money inched closer to an agreement, but still fell short of a final deal.
With six days until the government may not be able to pay all of its obligations, dealmakers were looking at a deal that would raise the debt ceiling for two years – through the 2024 presidential election – in exchange for two years of new spending limits mostly focused on domestic government programs, three people familiar with the matter said, speaking on the condition of anonymity to reflect the private talks.
The Biden administration would also agree as part of the deal to cut some funding for the Internal Revenue Service approved last year – which Republicans were eager to undo – and use the money to offset the spending cuts on domestic programs.
Exactly when the government will run out of money isn’t certain.
The Treasury Department says it could be as soon as June 1, less than a week off.
Other estimates say the “X-date” might come sometime in early June, but few analysts think there’s much more than a couple of weeks to maneuver.
Two prominent credit rating agencies warned that they could downgrade the U.S. government’s coveted AAA debt rating in the event of a default.
Even if negotiators do reach an agreement soon, they need time to put it into action.
House rules require 72 hours for lawmakers to review legislation before a vote. The Senate would also have to act. All told, passage could take days.
“We’re making progress and our goal is to make sure that we get a deal because default is unacceptable,” Deputy Treasury Secretary Wally Adeyemo told CNN on Friday. “The president has said it and the speaker has said it.”
To get a deal through, party leaders may need to execute a tricky sales pitch.
Any final agreement that attracts enough Democrats to pass would likely distance more hard-right Republicans, who have emerged as a dominant legislative force.
“This is totally unacceptable, and it’s not what we agreed to,” said Rep. Ralph Norman (R-S.C.), a top member of the far-right House Freedom Caucus, describing what he’s learned so far of the emerging deal as “watered down.”
Norman urged McCarthy to hew closely to the legislation that conservatives helped craft and pass last month, which raised the debt ceiling only into next year and coupled the increase with larger spending cuts than the two parties are now discussing.
He also noted that conservatives held up McCarthy’s ascent as speaker until he agreed to key concessions, including a commitment to pursue fiscal reforms: “The 20 of us who stood up to McCarthy in January will not stand for that.”
Asked if he would vote no, based on what he’s heard so far, he replied: “Not only me, but it’s going to be the 19 others and many more.”
Some liberals remain wary of the deal, too. Lindsay Owens, executive director of Groundwork Collaborative, a left-leaning group, criticized the proposed clawback of IRS funds.
“We shouldn’t be grading away our ability to collect revenue from wealthy tax cheats,” she tweeted.
Talking to reporters on Thursday, negotiators said the two sides still had their differences, including on core issues like the extent and duration of caps on federal spending.
With lawmakers in the House and Senate now back in their districts for Memorial Day weekend, the timeline became more precarious by the hour.
“I think there’s a sense of understanding from both teams that we have serious issues still to work out and come to terms with, and that’s going to take some time,” Rep. Patrick T. McHenry (R-N.C.), one of the key GOP negotiators, told reporters Thursday evening. “That’s all there is to it.”
On Thursday, White House press secretary Karine Jean-Pierre said “negotiations have progressed” and that ongoing talks were moving toward a “bipartisan, reasonable budget negotiation.”
“We’re fighting against Republicans’ extreme, devastating proposal that would slash – as you’ve heard me say – law enforcement, education, food assistance, all of these things are critical to American families who are just trying to make ends meet,” Jean-Pierre said.
“So what the people should know, what the American people should know, is that we are not taking any hostages here. Default is not an option.”
For weeks, negotiators have clashed over GOP demands that would significantly cut federal spending on programs such as nutrition assistance, rental aid and scientific research, which White House aides fear could spark a revolt among Democrats.
House Democrats have also been frustrated over how Biden has negotiated with Republicans, fearing their priorities are not being championed aggressively enough and that Biden hasn’t more forcefully pushed back publicly against Republican demands.
Meanwhile, GOP negotiators are having to account for a group of hard-right Republicans who argue spending restraints wouldn’t be steep enough.
Some even predicted losing support for the final compromise beyond just the roughly three dozen far-right members of the House Freedom Caucus.
On CNN, Adeyemo wouldn’t say where the negotiations were heading on whether to impose work requirements for recipients of some federal aid programs, which McCarthy has called essential to a final deal.
“I’m not going to negotiate in public,” he said. “But what I will say is the president’s been very clear about what he values in terms of making sure that we protect the most vulnerable Americans.”
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