Speaker of the House Kevin McCarthy, R-Calif., talks with reporters concerning the debt ceiling negotiations within the U.S. Capitol’s Statuary Hall on Wednesday, May 24, 2023.
Tom Williams | CQ-Roll Call, Inc. | Getty Images
Top congressional Republican Kevin McCarthy said on Saturday he was making “progress” in negotiations with Democratic President Joe Biden on raising the federal government’s debt ceiling, because the nation faced risk of default in little greater than per week.
Time is tight. The Treasury Department on Friday said the federal government would run wanting funds to pay all its bills on June 5 without congressional motion, a rather later but firmer deadline than its prior forecast of default as early as June 1.
And any deal in principle between Biden and House of Representatives Speaker McCarthy might be the beginning of what could easily be a week-long technique of shepherding laws through the narrowly and bitterly divided Congress.
“We wouldn’t have a deal,” McCarthy told reporters. “We will not be there yet. We did make progress, we worked well into early this morning. And we’re back at it now.”
Hardline Republicans have threatened to dam any bill that doesn’t meet their expectations, including sharp spending cuts.
Progressive Democrats have also threatened to withhold support for a number of the compromises raised, particularly around imposing recent work requirements on federal anti-poverty programs.
“It’s totally close and I’m optimistic,” Biden told reporters on Friday.
Republicans control the House by a 222-213 margin, while Democrats hold a 51-49 Senate majority, leaving a narrow path to pass any agreement by the Democratic president and Republican speaker into law.
Republicans have sought to curb government spending sharply over the approaching 10 years to slow the expansion of the U.S. debt, which is now equal to the annual output of the economy.
However the tentative agreement would likely fall well wanting their goal.
The 2 sides have tentatively reached an agreement that might raise the debt ceiling by enough to cover the country’s borrowing needs through the November 2024 presidential election.
It might boost spending on the military and veterans’ care, and cap spending for a lot of discretionary domestic programs, in keeping with sources accustomed to the talks.
McCarthy said Republicans were also still pushing for reforms to energy permitting, including making it easier to drill for gas and oil.
Sticking Points
Republicans have rejected Biden’s proposed tax increases, and neither side has shown a willingness to tackle the fast-growing health and retirement programs that can drive up debt sharply in the approaching years.
Biden’s signature infrastructure and green-energy laws would remain intact, while the Internal Revenue Service would see its recent budget increase scaled back barely.
But safety-net programs remain a sticking point. Republicans wish to stiffen work requirements for the Medicaid health plan for the poor and the SNAP food assistance program. Democrats say that might create more barriers for people already struggling to make ends meet.
Each programs expanded dramatically in the course of the COVID-19 pandemic but have been scaled back in recent months.
A failure by Congress to lift its self-imposed debt ceiling before June 5 could trigger a default that might shake financial markets and send the USA right into a deep recession.
Several credit-rating agencies have said they’ve put the USA on review for a possible downgrade, which might push up borrowing costs and undercut its standing because the backbone of the worldwide economic system.
An identical 2011 standoff led Standard & Poor’s to downgrade its rating on U.S. debt, hammering markets and sending the federal government’s borrowing costs higher.
