High Stakes: US Debt Ceiling Negotiations Continue with Time Running Out

The countdown has begun, the stakes are high, and no agreement has been reached regarding the US debt ceiling yet.

President Joe Biden and House Speaker Kevin McCarthy are set to meet again on Monday, after a weekend fraught with no progress in trying to reach a deal to avoid a first-ever US debt default, and the White House said their meeting is set for 5 p.m. :30 p.m. ET.

Negotiations between the White House and the House Republican Party hit a snag and stalled on Friday, and representatives for each side spent most of the next two days criticizing the other and defending their positions.

In a sign of a possible improvement, Biden and McCarthy spoke on the phone while the president was aboard Air Force One, returning to Washington after a brief trip to Japan. McCarthy told reporters Sunday that the call was “productive,” but that came after Biden harshly criticized Republicans in press conference in Hiroshima, where he said he was unable to promise fellow world leaders gathered at the G7 talks that the United States would not default.

“I can’t guarantee that they won’t lead us into default by doing something outrageous,” Biden said shortly before his departure for the United States.

It is not uncommon for high-stakes negotiations in the Oval Office to suffer setbacks and then recover, but the hurdle of the long weekend highlighted the challenge of finding consensus between the two sides with major sticking points still remaining.

The US Treasury has warned that time is running out to raise the country’s borrowing limit, and the US could default as soon as June 1, a warning echoed by Treasury Secretary Janet Yellen on Sunday if lawmakers and the White House cannot reach an agreement. It is likely that a global economic catastrophe will occur.

Congressional schedule

McCarthy told reporters at the Capitol on Sunday that Republican Representatives Garrett Graves of Louisiana and Patrick McHenry of North Carolina would start conversations again with White House staff “so we can tell them verbatim what we’ve been talking about.”

If an agreement is reached, there will remain significant challenges to its successful passage in the House and Senate.

You will need to write the legislative text, which can be tedious and complicated; As lawmakers and officials delve into the minutiae of policy, that can often lead to more problems over the minutiae.

Then the leaders of the two parties will need to wrestle over the votes to pass a bill, which is no small task with slim majorities in both houses.

On top of all that, we are only a few days away before June 1, and McCarthy said the House of Representatives will need four days to pass the legislation in the Senate. schedules when necessary.

points of disagreement and agreement

House Republicans seek federal spending cuts in return for their support for raising the debt ceiling. On Sunday, Biden acknowledged a “significant” rift with Republicans, insisting that while he is willing to cut spending “tax revenue is not off the table” as part of out of the bargain.

Graves, who is leading GOP debt-ceiling negotiations, earlier this month outlined four areas where he believes there could be agreement: reviewing the licensing process, recovering unspent COVID-19 relief money, strengthening labor requirements for some government aid programs, and setting spending limit.

Republicans have long insisted they will not raise the debt limit without spending cuts, but Democrats have sounded the alarm about the cuts Republicans want.

Sources familiar with White House sentiment acknowledge that part of the reason for the temporary breakdown in talks on Friday is that White House negotiators find the extent of spending cuts being pushed by House Republicans unacceptable, even though the White House has indicated its willingness to cut some spending.

GOP negotiators will cap the budget proposal introduced over the weekend with a six-year budget cap with the same cap structure remaining in the bill passed by the House at fiscal 2022 levels, according to a source familiar with the matter.

The source said the proposal included at least two items that were not part of their initial bill: immigration provisions and additional changes to business requirements for food stamps.

Biden said Sunday that much of what Republicans have proposed is “simply, quite frankly, unacceptable.”

Changes to work requirements have become a contentious issue, some Democrats have expressed concern about Republicans’ proposed strengthening of work requirements for social safety net programs, with some prominent Democrats suggesting that including the requirements is a red line in negotiations, Biden has said he will not bring ancillary work requirements on the table negotiations.

Democrats are also pushing for a minimum debt extension of at least two years so they don’t have to confront the issue again before the 2024 election, and according to a source familiar with the matter, the extension has not been finalized, as with most clauses that are part of the talks.