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Debt ceiling deal close, IRS funding in spotlight

US House Speaker Kevin McCarthy (R-CA) speaks to members of the media at the US Capitol on May 24, 2023 in Washington, DC.

Kevin Dietsch | Getty Images

WASHINGTON – White House and congressional negotiators were closing in on a compromise agreement on Friday to raise the debt ceiling for two years, with just six days left before the nation faces a grave threat of debt default.

In exchange for voting to raise the debt ceiling, House Republicans would gain at least two of their top priorities: rolling back baseline federal spending in 2024 on most discretionary programs and $80 million allocated to the Internal Revenue Service as part of 2022. Canceling some of the billion. Inflation Reduction Act, two sources with knowledge of the talks told CNBC.

That canceled IRS money would then be used to cover the shortfall in domestic funding created by GOP spending cuts, essentially preserving programs while technically cutting the overall topline figure. The Pentagon and veterans’ health benefits would survive any cuts, and their funding would actually increase next year.

Details were still fluid Friday morning, with two officials calling the IRS funding trade “a live issue.”

Spokespeople for House Speaker Kevin McCarthy, President Joe Biden and Senate Majority Leader Chuck Schumer did not immediately respond to requests for comment on the emerging outline.

But on the face of it, could offer a win-win for both parties. Republicans can claim, correctly, that they have achieved a baseline government spending cut for fiscal year 2024. Similarly, Democrats can say that they have preserved the vast majority of domestic programs at funding levels either equal to or below their current levels.

This is a developing story, please check back for updates.

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