WASHINGTON — House Speaker Kevin McCarthy said negotiations with the White House over raising the U.S. debt limit Wednesday were still hung up over a disagreement on future spending, indicating that the 2 sides were far apart with only eight days before the federal government could face an unprecedented default.
A tangible government spending cut in exchange for mountaineering the debt ceiling is a bedrock GOP demand, but a red line up to now for the White House. Increasing the borrowing limit doesn’t authorize recent spending.
Because the U.S. inched closer to default and possible economic chaos, McCarthy blamed Democrats for the holdup.
“And the off ramp here is to resolve the issue to spend lower than we spent last 12 months,” he said during a press conference on the Capitol.
The California Republican repeatedly touted a partisan spending bill that House Republicans passed in April with no votes from Democrats because the only option to lift the debt ceiling. “Don’t blame us Republicans after we put an affordable bill together,” said McCarthy.
Stocks fell to session lows following McCarthy’s comments, as investors closely watched the talks for any sign of progress.
“I feel we are able to make progress today,” McCarthy said, but he ignored an issue about whether the discussions had made progress within the last 24 hours.
After every week of meeting outside McCarthy’s office, Republican negotiators went to the White House on Wednesday, where they were expected to proceed haggling in an office constructing adjoining to the mansion.
The talks hit a “speed bump,” a Democratic official aware of the situation told NBC News on Wednesday.
But outside the Beltway, concerns grew about whether McCarthy and President Joe Biden would give you the chance to succeed in a deal to chop government spending enough to win the GOP votes needed to pass a bill that raises the debt ceiling before June 1.
Treasury Secretary Janet Yellen said Wednesday she was already seeing “some stress in financial markets,” driven by fears that the U.S. could stumble right into a first-ever debt default.
Debt ceiling-related stress was affecting Treasury markets particularly, Yellen said at a Wall Street Journal event. These signs of stress “must be a reminder of the importance of reaching a timely agreement.”
But after every week of each day sessions led by a gaggle of veteran negotiators, people on each side say the gap between what House Republicans want and what the White Home is willing to provide seems wider than ever.
For instance, one in all the lead delegates for Republicans, Rep. Patrick McHenry of North Carolina, laid bare on Tuesday night what had as much as that time only been implied, when a reporter asked him what concession Democrats were getting as a part of the talks, in an effort to win their votes within the House.
“The debt ceiling,” he said.
“That is what they’re getting,” added Rep. Garret Graves of Louisiana, one other GOP negotiator.
This view of the past week as one where Democrats are forced to just accept Republican demands, while Republicans in return offer only the prospect to avoid a catastrophic debt default, would anger Democrats and reduce the percentages of a deal. The GOP has pushed to chop spending as a part of any deal to extend the debt ceiling, which by itself doesn’t authorize recent outlays.
A default would wreak havoc on the U.S. economy and force hundreds of thousands to no less than temporarily lose government profit payments many depend upon to survive.
With talks at an apparent breaking point for the second time in every week, and the likelihood of a deal in the subsequent 24 hours — in time for the House to show an agreement right into a bill and vote for it before the weekend — looking very slim, McCarthy appeared open to letting members of the House leave D.C. for the Memorial Day weekend and not using a deal.
“I have not made that call yet,” he told reporters Tuesday, but added, “I’d have, depending on where we’re in that moment, have them come home and are available back.”
With Republicans appearing only to harden their position as time went on, Democrats on Wednesday accused McCarthy of caving to pressure from the far right of his caucus. They said he has yielded to members who’ve made a laundry list of demands, yet are unlikely to vote for a debt ceiling hike, regardless of what it comprises.
Certainly one of those laundry lists was released Wednesday by Rep. Chip Roy, R-Texas, a member of the ultraconservative House Freedom Caucus. Presented as a memo, the list contained seven provisions that were included within the debt limit bill House Republicans passed this spring, but which is dead on arrival within the Democratic controlled Senate.
“The next reforms were a part of the Limit, Save, Grow Act – each are critical and none must be abandoned solely for the search of a ‘deal,'” Roy’s memo reads.
Pressure like this from hardliners inside his own party has made McCarthy’s path to passing a bill way more treacherous, because he’ll need Democratic votes.
Biden has offered compromises, the Democratic official told NBC News, including freezing spending, rescinding unspent COVID funds and putting a two-year cap on spending.
But McCarthy has dismissed these concessions.
“Let me be very clear, we usually are not putting anything on the ground that does not spend lower than we spent this 12 months,” he said Tuesday.
This can be a developing story, please check back for updates.
