President Joe Biden, House Speaker Kevin McCarthy and the three other top congressional leaders are set to meet again Tuesday as they try to work out a deal to raise the debt limit and avoid an economically devastating default.
Negotiators continued their talks over the weekend and on Monday. The package being discussed reportedly could involve new caps on federal spending for a yet-to-be-determined length. Republicans want the limits to last for 10 years while Democrats are closer to two years. The two sides are also considering energy permitting reforms and clawing back some $60 billion in unspent pandemic aid funding.
Treasury Secretary Janet Yellen reiterated Monday that the deadline could be as soon as June 1. On Saturday, she told The Wall Street Journal that she is “hopeful” that the talks could result in a deal. “I’m told they have found some areas of agreement,” she said. The president sounded similarly upbeat on Sunday. “I remain optimistic because I’m a congenital optimist,” Biden said. “But I really think there’s a desire on their part as well as ours to reach agreement. I think we’ll be able to do it.”
Biden shouted “no” when asked by reporters Monday if he had any updates on the debt talks.
McCarthy offered a fairly dire take. He told reporters that the talks were nowhere near a conclusion and that the staff-level sessions were “not productive at all” and had not produced “agreement on anything,” according to Bloomberg. “I still think we’re far apart,” McCarthy told NBC and CNN. “It doesn’t seem to me yet that they want a deal, it just seems like they want to look like they are in a meeting but they’re not taking anything serious.”
Republicans reject closing tax loopholes: The White House recently offered up about a dozen proposals to help cut the deficit by closing tax loopholes. “Republican negotiators rejected every item,” The Washington Post’s Jeff Stein reports, citing three sources familiar with the matter. “The GOP’s rejection of the White House proposals — which has not previously been reported — reflects the near-unanimous opposition among congressional Republicans to using higher revenue to rein in the federal debt.”
Rep. Dusty Johnson of South Dakota has told reporters that the GOP has three red lines for any deal: the package can’t include a “clean” increase in the debt limit, can’t involve tax increases and must reduce the deficit.
The White House, meanwhile, has reportedly rejected the idea of rescinding elements of the Inflation Reduction Act passed by Democrats last year. The House GOP plan passed last month would eliminate billions in clean-energy tax subsidies enacted as part of the 2022 law and would also slash billions of dollars in additional funding for the IRS, money intended to help the agency crack down on tax cheats. The White House reportedly has also pushed to protect Biden’s plan to forgive billions in student loan debt.
Biden may be open to some tougher work requirements: The president indicated Sunday that he might be willing to accept GOP demands for more stringent work requirements for some federal benefit programs — but not for Medicaid. “I voted for tougher aid programs that’s in the law now, but for Medicaid it's a different story,” he said. “And so I’m waiting to hear what their exact proposal is.”
Scheduling issues ahead: Biden is slated to depart Wednesday on a trip to meet with G7 leaders in Japan. The Senate is scheduled to leave D.C. Thursday until after Memorial Day. McCarthy indicated that at least a short-term deal is necessary within days if lawmakers are to have time to pass the legislation. “I think we’ve got to have a deal done by this weekend,” he said.
The bottom line: There’s plenty of work left to do and a short time to do it.