White House and Republicans inch toward debt ceiling deal to avoid catastrophic default
The White House and congressional Republicans on Friday said they are making progress towards an 11th hour deal that would raise the debt ceiling and avoid a catastrophic default on the national debt.
House Speaker Kevin McCarthy said negotiators are inching toward an agreement that reportedly includes raising the limit until after the 2024 presidential election and freezing some domestic spending for the next two years.
Any deal would need to be enacted by June 1 when the Treasury says it will run out of money to pay the nation’s bills.
There are still many outstanding issues, including a GOP demand for tougher work requirements for beneficiaries of government assistance and Democratic efforts to use various accounting gimmicks to keep funding programs despite the purported spending freeze.
But even as they repeated partisan barbs, President Biden and House Speaker Kevin McCarthy both sounded optimistic notes on the evolving deal.
The feel-good tone suggested that the secretive talks are making good progress and will likely forge a breakthrough soon.
“I believe we’ll come to an agreement that allows us to move forward and protects the hardworking Americans of this country,” Biden said.
“I want to be able to solve this problem,” McCarthy said. “Nothing’s agreed to until it’s all agreed to. And we’re working through everything.”
Rank-and-file lawmakers are not expected back at work until Tuesday, just two days from the deadline.
The tight timeline started to spark some angst in the financial industry, with Fitch Ratings agency placing the United States’ AAA credit on “ratings watch negative,” warning of a possible downgrade.
But the closer-watched Wall Street indices shrugged off the worries with stocks soaring on hopes for a deal and good economic data.
Weeks of negotiations between Republicans and the White House have failed to produce a deal.
The White House has offered to freeze next year’s 2024 spending at current levels and restrict 2025 spending, but the Republican leader says that’s not enough.
Both sides are dealing with sniping from their political wings as reports of the potential deal started to leak out.
Conservative Republicans say they won’t support raising the debt limit without harsh cuts, while some also object to kicking the debt ceiling can down the road too far.
Progressives grumble that Biden is giving away too much of the Democratic agenda and should never have caved to GOP demands for negotiations.
Biden has ruled out, for now, invoking the 14th Amendment to raise the debt limit on his own.
House Democrats have all signed on to a legislative “discharge” process that would force a vote on a so-called clean debt ceiling increase.
But they need five Republicans to break with their party and tip the majority to set the plan forward, which seems impossible given that the GOP has succeeded in using its leverage to win concessions.