By LISA MASCARO, STEPHEN GROVES, SEUNG MIN KIM and KEVIN FREKING (Associated Press)
WASHINGTON (AP) — House Republicans pushed debt ceiling talks to the brink on Thursday, showing risky political bravado by leaving town for the holiday weekend just days before the United States cannot cope with an unprecedented default plunging the world economy into chaos.
However, Chairman Kevin McCarthy also said he had instructed his negotiating team “to work 24/7 to resolve this issue.”
On Capitol Hill, McCarthy, R-Calif., said “every hour counts” during talks with President Joe Biden’s team as they try to hammer out a budget deal. Republicans are demanding spending cuts that Democrats oppose as the price for raising the statutory debt ceiling.
“We went to the White House all day,” he told reporters that evening. “We are working hard to make this happen.”
In remarks at the White House, Biden said, “It’s about competing versions of America.” Still, both men expressed optimism that the rift between their positions could be bridged.
The White House said discussions with Republicans were productive, including via videoconference on Thursday, though serious disagreements remain as the president battles over his priorities.
“The only way forward is with a bipartisan deal,” Biden said. “And I believe we will reach an agreement that will allow us to move forward and protect American workers in this country.”
As the deadline approaches, it’s clear the Republican president – who leads a party aligned with Donald Trump whose right flank carried him to power and who spoke to the former president this week – is now considering a potential crisis.
Lawmakers tentatively aren’t expected to return to work until Tuesday, just two days from June 1, when Treasury Secretary Janet Yellen said the United States could start running out of cash to pay bills and face a default. federal payment. Biden will also be absent, leaving Friday for the presidential retreat in Camp David, Maryland, and Sunday for his home in Wilmington, Delaware. The Senate is on vacation and will be until after Memorial Day.
Meanwhile, Fitch Ratings has placed US AAA credit on “negative ratings watch”, warning of a possible downgrade.
Democratic lawmakers lined the floor of the House at the end of the workday to blame “extreme” Republicans for the risky potential default. “Republicans have chosen to leave town before sunset,” said House Minority Leader Hakeem Jeffries of New York.
Weeks of negotiations between Republicans and the White House failed to yield a deal — in part because the Biden administration resisted negotiating with McCarthy over the debt limit, arguing that full faith and credit of the country should not be used as leverage to extract other supporters’ priorities.
McCarthy is resisting the deep spending cuts Republicans are demanding in return for their vote to raise the nation’s borrowing limit. The White House has proposed freezing next year’s 2024 spending at current levels and restricting 2025 spending, but the Republican leader said that’s not enough.
One idea is to fix those headline budget numbers, but then add a “rollback” provision that applies the cuts if Congress is unable, during its annual appropriations process, to achieve the new goals.
“We have to spend less than we spent last year. That’s the starting point,” McCarthy said.
Pressure is mounting on McCarthy from the right flank of the House not to cave to any deal, even if it means missing the June 1 deadline.
“Don’t take an exit ramp five exits too early,” said Representative Chip Roy, R-Texas, a member of the Freedom Caucus. “Let’s hold the line.”
Trump, the former president who is running for re-election, has encouraged Republicans to “fail” if they don’t get the deal they want from the White House.
McCarthy said Trump told him, “Make sure you get a good deal.”
Failure to raise the nation’s debt ceiling, now at $31 trillion, to pay US bills already incurred would risk a potentially chaotic federal default. Anxious retirees and social service groups are already among those already making contingency plans by default.
Even if negotiators strike a deal in the next few days, McCarthy promised lawmakers he would abide by the rule of releasing any bills for 72 hours before voting — now likely Tuesday or even Wednesday. The Democratic-held Senate has pledged to move quickly to send the package to Biden’s office, just before a possible deadline of next Thursday.
Pushing a debt ceiling increase at the last minute is not uncommon for Congress, but it leaves little room for error in a volatile political environment. Democrats and Republicans will be needed to pass the final package in the divided Congress.
“We still have a ways to go,” Republican Rep. Garret Graves of Louisiana said as he juggled leading a tour of the Capitol for players and fans of the University of Washington women’s basketball team. of Louisiana.
The outlines of a deal have been in the works for days, but Republicans are unhappy as they press the White House team for more.
In a potential development, Republicans could soften their demand to increase defense spending, instead proposing to keep it at levels proposed by the Biden administration, according to a person familiar with the talks and granted anonymity to discuss it.
Republicans could achieve their goal of cutting the Internal Revenue Service’s beefed-up funding if they agree to allow the White House to shift that money to other national accounts, the person said.
Teams are also considering a proposal to spur development of Sen. John Hickenlooper’s power transmission line, D-Colo. That would facilitate construction of an interregional power grid, according to a person familiar with the project.
The White House has continued to argue that deficits can be reduced by ending tax breaks for the wealthiest households and some businesses, but McCarthy said he told the president as early as their February meeting that the increase in income through tax increases was not an option.
While Biden has ruled out, for now, invoking the 14th Amendment to raise the debt ceiling himself, Democrats in the House have announced that they have all signed into a legislative “discharge” process that would force a vote on the debt ceiling. But they need five Republicans to break with their party and tip the majority to push the plan forward.
Other issues remain unresolved. Republicans also want to tighten work requirements for government assistance to recipients of food stamps, cash assistance and the Medicaid health care program that Democrats say is a failure. It remains an issue where both sides have “digged in”, according to another person familiar with the talks and granted anonymity to discuss it.
They are almost certain to recover some $30 billion in unspent COVID-19 funds now that the pandemic emergency has been officially lifted.
The White House responded by offering to hold defense and non-defense spending steady next year, which would save $90 billion in fiscal year 2024 and $1 trillion over 10 years.
Associated Press writers Chris Megerian, Josh Boak, Zeke Miller and Mary Clare Jalonick contributed to this report.