President Joe Biden and House Speaker Kevin McCarthy reached an “agreement in principle” late Saturday to raise the nation’s legal debt limit, as they seek to limit federal spending and address a looming crisis ahead of a June 5 deadline. Rushed to deal to resolve, said the House Speaker.
The deal would prevent a catastrophic US default, but it also runs the risk of angering both the Democratic and Republican parties over the concessions made to reach it. Negotiators agreed to some Republican demands for increased work requirements on recipients of food stamps, which drew an uproar from House Democrats as a non-starter.
Getting congressional approval would require support from both parties.
McCarthy said the agreement was reached after the two spoke on the phone Saturday evening between the Democratic president and the Republican speaker. The nation and the world await a resolution to the political impasse that threatens the US and global economies.
With an outline of a deal, the legislative package could be drafted and shared with lawmakers as early as next week for votes in the House and later in the Senate.
Central to the package is a two-year budget deal that would keep spending flat for 2024 and impose limits for 2025 in exchange for raising the debt ceiling for two more years, moving the volatile political issue ahead of the next presidential election.
Biden spoke earlier in the day to discuss the status of negotiations with Democratic leaders in Congress, according to three people familiar with the situation, who spoke on condition of anonymity because they wanted to discuss the matter publicly. were not authorized.
The Republican House speaker gathered top aides behind closed doors at the Capitol as negotiators pushed for a deal that would raise the nation’s borrowing limit and avoid defaulting for the first time on federal debt, while also cutting spending. Doing what House Republicans are demanding.
As he arrived at the Capitol early in the day, McCarthy said Republican negotiators were “close to an agreement”.
McCarthy’s comments echoed the latest public assessment of Biden, who said Friday evening that a deal was “very close.” Biden and McCarthy last met face-to-face on the matter on Monday.
Treasury Secretary Janet Yellen told Congress the United States could default on its debt obligations as soon as June 5, followed by their new discussion by phone on Saturday – four days later than previously estimated – if lawmakers raised the federal debt limit. Did not take timely action to increase The extended “X-Date” gives both parties a little extra time as they scramble to strike a deal.
But as another day dragged on with the looming financial disaster, some problems surfaced on policy issues that remained unresolved throughout a week of stubborn negotiations.
Both sides have suggested that one of the GOP’s main holdups is to expand existing work requirements for recipients of food stamps and other federal aid programs, a longtime Republican goal that Democrats have strongly opposed. The White House said the Republican proposals were “cruel and senseless”.
They were still working on an agreement on federal permitting changes that would ease regulations for the development of oil, gas and renewable energy projects and encourage new transmission line connections.
McCarthy, who left before lunch on Saturday and arrived back at the Capitol with a large box of takeout, declined to elaborate on those discussions. One of his interlocutors, Louisiana Rep. Garrett Graves said there was “no chance” that Republicans could relent on the issue of work requirements.
Americans and the world were watching with unease the fragility of negotiations that could plunge the US economy into chaos and undermine the world’s confidence in the nation’s leadership. House negotiators left the Capitol at 2 a.m., only to return hours later.
Failure to lift the borrowing limit, which now stands at $31 trillion, to pay the country’s bills would shock the US and global economy. Yellen said that failing to act by the new date “will cause severe hardship to American families, damage our global leadership position and call into question our ability to protect our national security interests.”
With the next Social Security payment due next week, anxious retirees and others were already making contingency plans for missed checks.
The president, who spent part of the weekend at Camp David, continued to speak with his negotiating team several times a day, signing resolutions and countermeasures. Biden was upbeat as he departed the White House on Friday evening, saying: “It’s very close, and I’m optimistic.”
All sides are also hearing from other lawmakers, including independent Sen. Kirsten Sinema of Arizona, who has been at the center of much of the policy debate, and Reps. Josh Gottheimer of the bipartisan Problem Solvers Caucus, Dn.J.
Biden and McCarthy appear to be narrowing a deal on two years of budget cuts that would also extend the debt ceiling until 2025, before the next presidential election. The deal’s framework is shaping up to cut spending for 2024 and impose a 1% cap on spending growth for 2025.
Republican whip Rep. Tom Emmer of Minnesota, who is in charge of counting the votes from McCarthy’s slim majority to pass any deal, said he is asking rank-and-file lawmakers not to believe he What are even the leaders of the party listening to. Provide news about any deal.
Any deal must be a political compromise in a divided Congress. Many hard-right Trump-aligned Republicans in Congress have long been skeptical of the Treasury’s projections, and they have been pressing McCarthy to keep out.
“We are in constant contact with our members, telling them that you should not accept what is being reported,” Emmer said. “If there is an agreement, we will let them know.”
The Republican proposal on work requirements would save $11 billion over 10 years by raising the maximum age to existing standards, which require able-bodied adults who do not live with dependents to work or participate in training programs.
Current law applies those standards to recipients under age 50. The GOP plan would raise the age to include adults 55 and under. It would reduce the number of exemptions that states can grant to certain recipients subject to those requirements.
Biden has said that work requirements for Medicaid would be a non-starter. He initially seemed potentially open to negotiating minor changes to food stamps, now known as the Supplemental Nutrition Assistance Program, or SNAP, but his position has appeared to harden.
Lawmakers are not expected to return to work by Memorial Day weekend until Tuesday at the earliest, and McCarthy has promised lawmakers he will adhere to a rule on posting any bills 72 hours before voting.
The Democratic-held Senate has largely stayed out of the talks, leaving room for Biden and McCarthy. New York Senate Majority Leader Chuck Schumer has pledged to move quickly to send a compromise package to Biden’s desk.
Weeks of talks have failed to produce a deal partly because the Biden administration has for months resisted negotiating with McCarthy, arguing that the country’s full trust and credit should be used to drive out other partisan priorities. Should not be used as leverage.
But House Republicans rallied behind the spending cut plan, narrowly passing legislation in late April that would raise the debt ceiling in exchange for spending cuts.
Associated Press writers Zeke Miller, Stephen Groves, Fatima Hussein, Farnoush Amiri, Seung Min Kim and video journalist Rick Gentillo contributed to this report.