With time running out, the government announced late Friday a new default deadline of June 5, pushing the White House and Republicans into even more precarious negotiations over spending cuts and raising the nation’s legal debt ceiling. threatened to break in.
Still, President Joe Biden was optimistic as he left for Camp David over Memorial Day weekend, declaring, “It’s very close. I’m optimistic.”
“Negotiations are ongoing,” the president said as Republicans met with the Biden team at the White House in the Capitol. I hope to find out if we can come to an agreement by tonight. “
The new dates, set out in a letter from Treasury Secretary Janet Yellen, have raised concerns among Americans and the world about America’s brinkmanship.
In a blunt warning, Yellen warned that failure to act by the new deadline “would create serious hardship for American families, undermine America’s global leadership position, and its ability to defend its national security interests.” It raises questions,” he said. With their next Social Security payment coming up next week, anxious retirees were already making contingency plans for leaked checks.
The new deadline is one week from Monday, four days later than originally expected. Yellen said all “special measures” taken by the Treasury Department would be exhausted.
Biden and Republican House Speaker Kevin McCarthy appear to be narrowing down a two-year budget deal that extends the debt ceiling beyond the next presidential election. After frustrating closed-door talks, a compromise appeared on the horizon on Friday.
Republicans have made some headway in their efforts to make deep spending cuts opposed by Democrats. But the two campaigns have been “pursued,” particularly over Mr. McCarthy’s demands for tougher working conditions for government food stamp recipients, which Democrats say is not the start.
Earlier on Friday, McCarthy said Republican debt negotiators and the White House had reached a “critical moment” in their struggle to reach a deal with Biden as lawmakers took a break over the Memorial Day long weekend. said it does.
Both deals are political compromises that require support from both Democrats and Republicans to pass in a divided Congress. Failure to remove the borrowing limit to pay the current $31 trillion national burden would send shockwaves through the U.S. and global economies.
But many far-right Trump Republicans in Congress have long been skeptical of the Treasury Department’s prospects and are pressuring Mr. McCarthy to hold out.
A deal is within reach, all that’s left is to do it,” said Rep. Patrick McHenry (RN.C.), one of the negotiators.
Biden made an optimistic comment at the White House before Yellen’s letter was released, cheering one of the top negotiators “hopefully we’re closing in on a deal.”
He was referring to Shalanda Young of the Office of Management and Budget, who attended the salute to the Louisiana Women’s Basketball National Champion.
While the outlines of an agreement to cut spending in 2024 and impose a 1% cap on spending growth in 2025 are taking shape, the two countries are still stuck on various provisions. The debt ceiling, which currently stands at $31 trillion, will be lifted for two years to pay off the national debt.
A person familiar with the talks said the two countries were “packed” over whether to agree to Republican demands for tougher working conditions for those receiving government food stamps, cash aid and medical aid.
House Democrats say the requirements for medical and food aid are unnecessary.
Asked if Republicans would ease working conditions, Graves quipped: “Absolutely not.”
House Republicans had pushed the issue to the brink, displaying dangerous political bravery by leaving town for the Memorial Day holiday. Lawmakers are tentatively not expected to return to work until Tuesday, but a return is uncertain at this point.
“The world is watching,” International Monetary Fund Managing Director Kristalina Georgieva said after meeting with Yellen on Friday. “Let us remember that it is now the twelfth hour.”
Weeks of negotiations between Republicans and the White House failed to produce a deal. Partly because the Biden administration resisted negotiations with Mr. McCarthy over the debt ceiling, arguing that the country’s full trust and credit should not be used as leverage to elicit other party priorities. It’s the reason.
“We have to spend less than we did last year. That’s the starting point,” McCarthy said.
One idea is to set a top-line budget figure and add a “snapback” clause that would force cuts if Congress fails to meet new targets during the annual spending process.
When it comes to work requirements for aid recipients, the White House is particularly resistant to measures that could push more people into poverty or deny them access to health care, people familiar with the talks said. .
Over the Republican request to cancel the IRS funding, it remains an “unresolved issue” whether both sides will compromise to allow the money to be directed to other programs in the country, the people said. said.
Another person familiar with the talks said Republicans could ease demands to increase defense spending beyond what Biden had proposed in the budget, and instead propose to keep it at the level Biden proposed. It is said that there is a sexuality.
The team is also looking at proposals from Democratic Senator John Hickenlooper of Colorado to speed up the development of grids to help build grids between regions.
Meanwhile, Mr. McCarthy feels pressure from the right wing of the House to stick to any deal, even if the Treasury Department deadline has passed.
McCarthy said he was told by former president Donald Trump, who is running again, to “make sure you get a good deal.”
But wary Democrats are also putting pressure on Biden. The top three House Democratic leaders, led by Rep. Hakeem Jeffries, met with the White House late Thursday.
McCarthy promised lawmakers that they would comply with the rule that any bill be introduced 72 hours before the vote. The Democratic-led Senate has vowed to act quickly to get the package to Mr. Biden’s desk just before the deadline next Thursday.
Meanwhile, Fitch Ratings put the U.S.’s AAA rating on “rating watch negative” and warned of a possible downgrade.
The White House has long argued that the deficit could be reduced by ending tax cuts for wealthy households and some businesses, but McCarthy told the president at a meeting in February that tax hikes would raise revenues controversially. He said he was told he was ineligible.
Biden has so far denied the possibility of invoking the 14th Amendment to raise the debt ceiling on his own, but all Democrats in the House of Representatives will be involved in a congressional “immunity” process that forces them to vote on the debt ceiling. announced that they had all signed. But it takes five Republicans to break with the party and tip the majority to move forward with the plan.
Now that the pandemic emergency is officially lifted, they are almost certain to recoup some $30 billion in unspent Covid-19 funds.
Associated Press reporters Mary Claire Jaronic, Stephen Groves, Farnash Amiri and video journalist Rick Gentilo contributed to this report.