Talks teeter on the brink
Lawmakers return to work Tuesday, just days from deadline
DEBT LIMIT
WASHINGTON — House Republicans pushed debt ceiling talks to the brink on Thursday, displaying risky political bravado in preparing to leave town for the holiday weekend just days before the U.S. could face an unprecedented default.
However, Speaker Kevin McCarthy said he directed his negotiating team "to work 24/7 to solve this problem."
At the Capitol, McCarthy, R-Calif., said that "every hour matters" in talks with President Joe Biden's team as they try to work out a budget agreement. Republican are demanding spending cuts the Democrats oppose as their price for raising the legal debt limit.
In remarks at the White House, Biden said, "It's about competing versions of America."
Yet both men expressed optimism that the gulf between their positions could be bridged.
The White House said discussions with the Republicans were productive, including by video conference Thursday, though serious disagreements remained as the president fights for his priorities.
"The only way to move forward is with a bipartisan agreement," Biden said. "And I believe we'll come to an agreement that allows us to move forward and protects the hardworking Americans of this country."
As the deadline nears, it's clear the Republican speaker — who leads a Trump-aligned party whose hard-right flank lifted him to power — is now staring down a potential crisis.
Lawmakers are tentatively not expected back at work until Tuesday, just two days from June 1, when Treasury Secretary Janet Yellen said the U.S. could start running out of cash to pay its bills and face a federal default. Biden will also be away, departing Friday for the presidential retreat at Camp David and Sunday for his home in Wilmington, Delaware. The Senate is on recess and will be until after Memorial Day.
Meanwhile, Fitch Ratings agency placed the United States' AAA credit on "ratings watch negative," warning of a possible downgrade.
Democratic lawmakers lined up on the House floor as the workday ended to blame "extreme" Republicans for the risky potential default. "Republicans have chosen to get out of town before sundown," said House minority leader Hakeem Jeffries of New York.
Stalled negotiations
Weeks of negotiations between Republicans and the White House failed to produce a deal — in part because the Biden administration resisted negotiating with McCarthy over the debt limit, arguing that the country's full faith and credit should not be used as leverage to extract other partisan priorities.
McCarthy is holding out for steep spending cuts that Republicans demand in exchange for their vote to raise the nation's borrowing limit. The White House offered to freeze next year's 2024 spending at current levels and restrict 2025 spending, but the Republican leader says that's not enough.
One idea is to set those topline budget numbers but then add a "snap-back" provision that enforces the cuts if Congress is unable during its annual appropriations process to meet the new goals.
Pressure is bearing down on McCarthy from the House's right flank Freedom Caucus not to give in to any deal.
"Don't take an exit ramp five exits too early," said Rep. Chip Roy, R-Texas, a Freedom Caucus member. "Let's hold the line."
Failure to raise the nation's debt ceiling, now at $31 trillion, to pay America's already incurred bills would risk a potentially chaotic federal default. Anxious retirees and social service groups are among those already making default contingency plans.
Even if negotiators strike a deal, McCarthy promised lawmakers he will abide by the rule to post any bill for 72 hours before voting — now likely Tuesday or even Wednesday. The Democratic-held Senate vowed to move quickly to send the package to Biden's desk, right before next Thursday's possible deadline.
'Ways to go'
Pushing a debt ceiling increase to the last minute is not uncommon for Congress, but it leaves little room for error in a volatile political environment. Both Democrats and Republicans will be needed to pass the final package in the split Congress.
"We still have a ways to go," top Republican negotiator Rep. Garret Graves of Louisiana said.
In one potential development, Republicans may be easing their demand to boost defense spending, in-stead offering to keep it at levels the Biden administration proposed, according to one person familiar with the talks and granted anonymity to discuss them.
The Republicans may achieve their goal of rolling back bolstered funding for the Internal Revenue Service if they agree to allow the White House to push that money into other domestic accounts, the person said.
The teams also are eyeing a proposal to boost energy transmission line development from Sen. John Hickenlooper, D-Colo., that would facilitate the buildout of an interregional power grid, according to a person familiar with the draft.
The White House continues to argue that deficits can be reduced by ending tax breaks for wealthier households and some corporations, but McCarthy said raising revenue from tax hikes was off the table.
Republicans want to beef up work requirements for government aid to recipients of food stamps, cash assistance and the Medicaid health care program that Democrats say are a nonstarter. The White House countered by proposing to keep defense and nondefense spending flat next year, which would save $90 billion in the 2024 budget year and $1 trillion over 10 years.
