Sides race for a deal
Senate Minority Leader Mitch McConnell (from left), R-Ky.; Senate Majority Leader Chuck Schumer, D-N.Y.; and Speaker of the House Kevin McCarthy, R-Calif., applaud during a portrait-unveiling ceremony for former Speaker of the House Paul Ryan, R-Wis., at the Capitol on Wednesday in Washington.
All the hand-wringing over a potential government default if Congress doesn’t increase the national debt limit has conjured up images of past government shutdowns. In fact, there’s a big difference between a government default and a government shutdown. A default would occur if the government exceeds its legal borrowing limit and can no longer pay all its creditors or pay for existing programs.
WASHINGTON — Negotiators from the White House labored Thursday over the U.S. debt limit with House Speaker Kevin McCarthy’s emissaries at the Capitol, grinding through head-to-head talks trying to strike a budget deal to avert a looming economic crisis.
With hopes for a breakthrough as soon as this weekend, President Joe Biden and McCarthy tapped their top representatives to work out a deal after talks with a larger contingent stalled.
Upbeat, McCarthy said it was important to have an “agreement in principle” by the weekend if they hope to get to a House vote next week. That would leave enough time for the Senate to act, too, ahead of a deadline as soon as June 1.
“Everyone’s working hard,” McCarthy told CNN and others at the Capitol.
The White House team also appeared upbeat as they entered the building, but declined comments and departed two hours later. They were expected to be back at it on Friday and into the weekend.
“This does not have to be a crisis,” Vice President Kamala Harris said during a virtual meeting of community leaders Thursday.
“A default could trigger a recession, stop military paychecks and raise interest rates for years to come,” Harris said. “America must pay our bills, just like you and your family and other hardworking Americans do every single day.”
All sides are racing to devise a budget-cutting deal that Democrats and Republicans can live with, the price to be paid as McCarthy’s newly empowered House Republicans try to extract steep spending reductions. Those cuts would be in exchange for GOP votes to raise the debt limit, which is now $31 trillion, and keep paying the nation’s already-due bills.
Biden and McCarthy have mostly cooled what had been heated rhetoric over the Republican demands. The president said he would be checking on talks as he is abroad for the next several days at the Group of Seven summit in Japan. Biden cut short the rest of his trip to Papua New Guinea and Australia so he could return early to Washington.
“I’m confident that we’ll get the agreement on the budget and America will not default,” Biden said Wednesday before he departed.
Behind closed doors are the key personnel who could cut a sweeping budget deal. Steve Ricchetti, Biden’s longtime aide who is now counselor to the president, along with Office of Management and Budget Director Shalanda Young and legislative affairs director Louisa Terrell are representing the administration. McCarthy himself said he planned to stop by some of the talks, and has tasked Rep. Garret Graves, R-La., who is a close ally, for the Republicans. Another Republican, Rep. Patrick McHenry, of North Carolina, the chairman of the Financial Services team, newly joined Thursday.
A White House official said Bruce Reed, the deputy chief of staff, is traveling with the president to keep in contact and keep Biden informed.
“We’ve got a lot more work to do,” McHenry said after Thursday’s session.
At stake is federal spending over the next several years as Republicans use the debt ceiling vote, a routine exercise that’s typically done in a bipartisan way to raise the borrowing capacity and pay the nation’s bills, as a way to push their budgeting priorities.
The contours of a deal that includes some cuts, rescinding unused COVID-19 money and a framework to discuss new permitting rules to more quickly develop energy projects are taking shape, but the details remain daunting.
McCarthy’s Republicans want to roll back spending to fiscal 2022 levels and cap annual increases at just 1% over the next decade — sparing Defense and Veterans accounts — in what Democrats say would be devastating cuts inflicting hardship on many Americans.
The Republicans know their proposal would only make a dent in the nation’s growing debt load, but they argue spending cuts need to start somewhere to get a handle on what they say are unsustainable annual deficits.
Democrats are resisting, and negotiators are eyeing budget caps for the next several years as an alternative to limits that would extend for a decade.
Notably absent from the negotiating room are they congressional appropriators — the House and Senate chairwomen who run the Appropriations Committees, which actually put the spending plans in place. It’s clear that Democratic appropriators and perhaps even some Republicans would almost certainly balk at the levels of cuts being considered.
Showing the pressure McCarthy faces from his right flank, the conservative House Freedom Caucus said in statement “there should be no further discussion” until the Senate approves the House-passed Republican bill.
With the Senate in Democratic control, that’s highly unlikely. And Biden already said he would veto it.
One area all sides seem more likely to agree on would be the Republican proposal to claw back some $30 billion in unspent COVID-19 funds now that the federal government has declared an official end to the pandemic emergency.
McCarthy has vowed to abide by House rules that require 72 hours notice before voting on any bill, meaning an agreement is needed this weekend if the House wants to vote before it leaves at the end of next week for the Memorial Day recess.
Senate Majority Leader Chuck Schumer told senators Thursday, as they prepared to depart for their own weeklong recess, they need to be ready to return with 24 hours notice to vote, if needed. More likely, the Senate would be expected to start voting when it returns after Memorial Day.
