In Debt-Ceiling Talks, Biden, Republicans Signal a Deal Could Be Near
House Speaker Kevin McCarthy plans to brief the GOP conference and congressional leaders before announcing a deal
WASHINGTON—Negotiations to raise the nation’s $31.4 trillion debt ceiling and avert an unprecedented default stretched through Saturday, as President Biden and House Republicans signaled that a deal was near but sticking points remained.
Biden was expected to speak by phone on Saturday evening with House Speaker Kevin McCarthy (R., Calif.), two people familiar with the matter said, after representatives for the White House and House Republicans spent the day in negotiations.
The president spoke earlier Saturday with Democratic leaders in Congress—Senate Majority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries, both of New York—these people said.
McCarthy started the day saying he was unsure when a deal would be ready. “We’ll get it when it gets right… We’ve got to make sure we get a right agreement for the American people,” he said. McCarthy also said that before announcing a deal, he plans to brief the GOP conference and congressional leaders. Lawmakers will be given 72 hours to review the text before a vote, which will also give them time to return to Washington.
Negotiators are trading a shortlist of final items, hoping to strike a deal soon to set up votes on the legislation next week. The Treasury Department, which is using extraordinary measures to avoid exceeding the debt ceiling, estimated Friday that the government could run out of money to pay its bills if Congress doesn’t act by June 5.
McCarthy huddled with his team in his Capitol office for most of the day. Just before noon, he and his lieutenants headed to Chipotle for lunch in the midst of negotiations. Asked what it meant for the status of the deal, McCarthy told reporters that it meant that he was hungry.
Reaching a deal would ease mounting concerns about the government’s ability to pay its bills. Lawmakers of both parties, business groups and Wall Street companies have raised alarms over the prospect of a government default, which they say would be disastrous for financial markets and the U.S. economy. If the government ran short of money, it would have to suspend certain pension payments, withhold or cut the pay of soldiers and federal workers, and potentially delay interest payments, which would constitute default.
McCarthy said that an agreement to ease the federal permitting process to speed construction of energy projects was still in the works. The latest measure under discussion was modeled on legislation by Sen. John Hickenlooper (D., Colo.) that would create interregional transmission networks to help upgrade the electric power grid.
Last year’s Inflation Reduction Act called for expanding renewable energy production, leading to concerns that the country needs new transmission lines to accommodate all the new projects. House Republicans also passed their own energy measure earlier this year.
Work requirements emerged Friday as one of the last remaining sticking points in the talks, which appeared to have made progress on a two-year agreement to cap spending and raise the borrowing limit, extending it past the 2024 election.
The right flank of the House GOP began opposing the deal before it was announced, signaling that McCarthy could have a problem getting votes from the hardline conservatives in his conference.
“Moving the issue of unsustainable debt beyond the presidential election, even though 60% of Americans are with the GOP on it? That must be a false rumor,” Rep. Dan Bishop (R., N.C.) tweeted.
Republicans are pushing to strengthen the work mandate on individuals without disabilities or dependents, something Democrats adamantly oppose. The issue is so polarizing that the final decision on work requirements could cause significant defections from either party, depending on what is included, despite a relatively small budgetary impact.
“It comes down to whether or not we’re going to default on the American debt, we’re going to default on seniors on Social Security or Medicare or have the Democrats continue to say we’re going to prioritize welfare payments for people that are refusing to work,” said Rep. Garret Graves (R., La.), who has been taking part in the talks.
Biden has indicated he won’t consider a GOP proposal to impose new work requirements for Medicaid, a healthcare program for low-income and disabled people. However, he hasn’t closed the door as firmly on changes to existing requirements for food aid and cash-assistance programs. The White House put out a statement Friday calling proposed requirements cruel and ineffective.
Beefing up work requirements would mark a political win for Republicans, but do relatively little to rein in federal spending.
The spending deal under discussion would cap federal spending but would include increases for the military and veterans, one person familiar with the discussions said. Setting the top-line numbers for spending has consequences for how military spending, veterans benefits and nondefense programs such as early childhood education and cancer research are funded.
Also up for discussion is rescinding some of the $80 billion that Congress approved last year to expand the Internal Revenue Service, which the agency had planned to use to boost tax enforcement and modernize its technology, people familiar said. Republicans voted earlier this year to claw back most of the money, a move that would be a net increase in the budget deficit because it would shrink tax revenue.
Democrats say the money is necessary so the government can reverse a decade of attrition at the tax agency, hiring thousands of new auditors and directing them at high-income households and large corporations. Republicans campaigned against the additional IRS money, warning that the agency couldn’t be trusted and that more audits would ultimately burden small businesses and middle-income Americans.
Congress intended the money as long-term funding through fiscal 2031, a supplement atop the agency’s annual budget. Losing some of that money would force the IRS to scale back its plans or come back to Congress sooner than intended for another tranche of long-term money.