Deadline looming, Biden and McCarthy narrow in on budget deal to lift debt ceiling
With just days to go before the deadline, US President Joe Biden and House Speaker Kevin McCarthy have agreed to curb the federal deficit in exchange for raising the national debt ceiling and avoiding an economically catastrophic government default. We have narrowed it down to the targeted two-year budget agreement.
The Democratic president and Republican chairman hope to compromise on the budget this weekend. The two countries have yet to agree on spending levels for 2024 and 2025 as Republicans push for deep cuts. Any deal would require political compromise and support from both Democrats and Republicans to pass through a divided Congress.
But it’s not just the budget flow that matters.
Officials familiar with the talks agree with the Republicans’ demands for tougher working conditions for those receiving government food stamps, cash aid and medical aid, some of the most vulnerable Americans. He said the two countries were “close-minded” about whether to do so. .
Still, Biden and McCarthy expressed optimism heading into the weekend that the gap between positions could be closed. The two-year deal would raise the then-current debt ceiling after the 2024 presidential election.
“I knew this wasn’t going to be easy,” California Republican McCarthy said as he left the Capitol Thursday night.
“It’s tough, but we’re working on it and we’re going to keep working until this is done,” McCarthy said.
House Republicans have pushed the issue to the brink, demonstrating dangerous political bravery by leaving town for the Memorial Day holiday. The U.S. could face an unprecedented default as early as June 1, throwing the global economy into turmoil.
“This is competing with the American version,” Mr. Biden said in a statement at the White House.
“The only way forward is through a bipartisan deal,” Mr. Biden said on Thursday. “And we believe we will reach an agreement that will allow us to move forward and protect the hardworking Americans of this country.”
Lawmakers are tentatively not expected to return to work until Tuesday, a deadline that Treasury Secretary Janet Yellen said the US could start running out of money to make payments and face a federal debt default. It is only two days after the deadline at the beginning of the month.
Biden will be away this weekend, leaving for a presidential recuperation in Camp David, Maryland, on Friday and heading to his home in Wilmington, Delaware, on Sunday. The Senate is in recess and will resume after Memorial Day.
Meanwhile, Fitch Ratings put the U.S.’s AAA rating on “rating watch negative” and warned of a possible downgrade.
Weeks of negotiations between Republicans and the White House failed to produce a deal. That’s partly because the Biden administration resisted negotiations with Mr. McCarthy over a debt ceiling, arguing that the country’s full trust and credit shouldn’t be used as leverage to win over other parties. Priority.
The White House has proposed freezing next year’s spending in 2024 at current levels and capping spending in 2025, but Republican leaders say that’s not enough.
“We have to spend less than we did last year,” McCarthy said. “That’s the starting point.”
One idea is to set these top-line budget numbers, but add a “snapback” clause that would force cuts if Congress fails to hit the new targets during the annual appropriations process.
Regarding work requirements for aid recipients, the White House is particularly resistant to measures that push Americans into poverty or strip them of health care, according to people familiar with the talks, who asked not to be named about the behind-closed-door discussions. It says.
Regarding Republican requests to cancel funding to the Internal Revenue Service, the person said, whether the two sides would compromise by allowing the funds to go to other programs in the country remains an “unresolved issue.” It is said that
McCarthy is under pressure from the right wing of the House not to bow to any deal, even after the June 1 deadline.
“Let’s keep the line,” said Rep. Chip Roy (R-Tex.), a member of the Freedom Caucus.
McCarthy said former President Donald Trump, who is running for president again, told him to “make sure you get a good deal.”
Failure to raise the national debt ceiling, currently at $31 trillion, to pay the bills the United States already owes risks a potentially chaotic federal default. Anxious retirees and social services groups are already among those with default contingency plans.
Even if negotiators reach a deal within a few days, McCarthy has promised lawmakers to abide by the rule of submitting any bill at least 72 hours before a vote, now Tuesday or Wednesday. likely to become The Democratic-led Senate has vowed to act quickly to get the package to Mr. Biden’s desk just before the deadline next Thursday.
Another person familiar with the talks said Republicans could offer to relax the demands for higher defense spending and instead keep it at levels proposed by the Biden administration.
The team is also eyeing a proposal by Senator John Hickenlooper of Colorado to speed up the development of power grids, according to people familiar with the draft. The two were also given anonymity to discuss private negotiations.
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 ruled out invoking the 14th Amendment to raise the debt ceiling on his own, but a legislative “immunity” process that forces all House Democrats to vote on the debt ceiling. announced that they had all signed the But it takes five Republicans to break with the party and tilt 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 unused COVID-19 funds.
Associated Press reporters Chris Megerian, Josh Bork, Zeke Miller, and Mary-Claire Jaronic contributed to this report.