Debt Talks ‘Nowhere Near a Deal’ as Deadline Looms
The Debt

Debt Talks ‘Nowhere Near a Deal’ as Deadline Looms

Reuters/Kevin Lamarque

A day after both President Joe Biden and House Speaker Kevin McCarthy described their Monday meeting as “productive,” the negotiations continued but huge differences remain unresolved.

McCarthy reportedly told Republicans at a closed-door meeting Tuesday morning that the negotiators are “nowhere near a deal.” The speaker urged his members to stick by him.

Both McCarthy and Republican Rep. Garret Graves, a chief GOP negotiator, insisted that the White House has not moved far enough on spending, rejecting a compromise proposal to freeze outlays at current levels.

“We are not putting anything on the floor that doesn’t spend less than we spent this year,” McCarthy said.

Asked about potential Republican concessions in the talks, McCarthy told CNN: “We’re going to raise the debt ceiling.”

Graves similarly insisted there would be no deal without spending cuts. “Until this administration is willing to recognize that they are having record spending, record deficits and record taxes, then we're not going to be able to come together,” he told reporters. “What's unreasonable is the White House position. It's irresponsible, and it literally is jeopardizing the generation after us, the children and grandchildren of today and this is just unsustainable."

Another GOP negotiator, House Financial Services Committee Chairman Patrick McHenry of North Carolina, said that the White House has shown a “lack of urgency” in the talks, a point that Biden spokesperson Karine Jean-Pierre strongly disputed.

The White House, meanwhile, said that “House Republicans have continued to demand draconian cuts to critical programs Americans rely on.” In a press release, the Office of Management and Budget warned again that the bill the GOP has put forth so far combined with Republicans’ commitment to preserve defense spending levels would likely require cuts of at least 30% to programs including education, research, public safety and public health.

Biden has called for raising revenue by increasing taxes on corporations and has proposed to save federal money by expanding the number of prescription drugs for which Medicare can negotiate pricing. McCarthy has rejected any tax hikes and told reporters that he thought Biden was trying to “disrupt the whole negotiations” by bringing up the Medicare proposal. “To me, that's a tactic to try to blow up negotiations," he said.

Treasury looks to buy more time: With the days until a potential default running short, the Treasury Department has reportedly asked federal agencies if it can delay upcoming payments as the Biden administration looks for ways to stave off a potential default, The Washington Post reports. The paper adds that Treasury officials sent a memo to agencies last week instructing them to take additional steps to inform Treasury about deposits and spending.

“With a big influx of quarterly tax payments expected to arrive in Treasury’s coffers on June 15, administration officials are looking for ways to hoard cash and eke out a few more days,” the Post explains. “If they can make it to June 15, the surge in revenue might give Treasury enough funding to push the X-date into July, when a fresh round of accounting measures would become available, perhaps allowing them to push the prospect of default even further into the future.”

One administration official acknowledged that they are “looking under the couch cushions,” adding that “it’s a very large couch.” Goldman Sachs economist Alec Phillips told the Post that Treasury might still be able to direct agencies to slow down their processes for submitting payments to buy more time. And Treasury might also be able to temporarily raise tens of billions of dollars by selling off bonds held in government trust funds and buying them back once the cash crunch ends.

At the same time, the Post notes that these options come with downsides and that administration officials aren’t counting on such fallback plans.

House pushes off appropriations markups: House Appropriations Committee Chair Kay Granger announced overnight that this week’s planned markups of four GOP spending bills for fiscal year 2024 were postponed in light of the ongoing debt limit negotiations.

R-E-L-A-X? “Debt limit talks between White House and House Rs are oscillating between productive meetings and near-breakdowns, which is actually not that unusual for a big negotiation,” Politico’s Burgess Everett tweeted. And Senate Minority Leader Mitch McConnell urged calm. “Everybody needs to relax,” the Kentucky Republican said. “The president and the speaker will reach an agreement. It will ultimately be passed on a bipartisan vote.”

The bottom line: “Nowhere near a deal” speaks for itself. The House is scheduled to be on recess from Thursday afternoon until June 5. McCarthy reportedly told his members they should go home to their districts if a deal isn’t reached by Memorial Day weekend.