Debt ceiling talks are ‘closer,’ but still haven’t reached a deal
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For much of the week, a familiar rhythm had set in on Capitol Hill. Talks never imploded or paused altogether, as they did the week before. Negotiators appeared to trudge from one meeting to the next, without indicating much concrete progress. Even as the need to find agreement intensified, House Republicans and the White House remained at odds over the extent and duration of new restrictions on federal spending, with each side accusing the other of violating their respective red lines.
On Wednesday, the bipartisan discussions were held at the White House and lasted roughly four hours. Republicans have repeatedly held court with reporters, saying there are still “significant gaps” and that they had already made a concession to Democrats by offering to raise the debt ceiling.
But by Thursday morning, some signs of progress were emerging.
“We know where our differences lie. We worked well past midnight last night. We’re back at it today, trying to get to the conclusion that can solve this problem,” House Speaker Kevin McCarthy (R-Calif.) told reporters Thursday. “We’ve already talked to the White House today. We’ll continue to work. They’re working on numbers. We’re working on numbers.”
Biden said talks were moving well, adding “I believe we’ll come to an agreement.”
“Speaker McCarthy and I had several productive conversations, and our staffs continue to meet as we speak and we’re making progress,” he said in the Rose Garden of the White House. “I made clear time and again, defaulting on our national debt is not an option.”
One of McCarthy’s chief lieutenants in the talks, Rep. Patrick T. McHenry (R-N.C.), told reporters the talks were moving ahead but remained “sensitive.” He said he did not expect a deal to come together by Thursday night.
“Are we closer? Yes,” McHenry said. “Is it more difficult? Yes.” He continued: “Nothing’s done, and we’re at a sensitive phase with sensitive issues that remain. Those sensitive issues are the thorniest issues that we’ve been discussing.”
House Majority Leader Steve Scalise (R-La.) said the issues under discussion were “narrowing.”
At the same time, hard-right Republicans lashed out Thursday at the emerging framework as they understood it: roughly a doubling of the debt increase, beyond the $1.5 trillion increase in a bill the House approved last month, while trimming most of their conservative policy demands.
“Now what we’re talking about, allegedly, is $3.5 trillion to $4 trillion debt ceiling increase, for a whole lot less of those things. So yes, my antenna is up,” said Rep. Chip Roy (R-Tex.), an influential member of the far-right House Freedom Caucus.
Just two days ago, Roy stood with McHenry and Rep. Garret Graves (R-Ga.), the other GOP negotiator, amid dozens of reporters to back up their position in talks with Biden advisers. Now he’s ready to lead the opposition to their work.
“Someone explain to me why that’s an off-ramp that should be taken now,” Roy told reporters after the House finished up its session Thursday. “I think it’s an exit ramp about five exits too early.”
Some predicted a free fall of support for the final compromise that would be broader than just the roughly three dozen far-right members of the Freedom Caucus.
“That would absolutely collapse the Republican majority for this debt ceiling increase,” Rep. Bob Good (R-Va.) said.
Former president Donald Trump weighed in on the talks Thursday, too, saying at his golf course in Virginia that he had spoken to McCarthy earlier in the day.
“I think he’s doing a really good job. Tough situation,” Trump said. "They spent too much money — way, way too much money on nonsense. It’ll get worked out.”
The national debt increased by more than $5 trillion during Trump’s term in office.
On Monday, after McCarthy and President Biden met in the Oval Office, both leaders emerged with a more upbeat tone. Republicans and Democrats have consistently said the United States will not default on its debt. And Congress often seems to prefer to wait until the 11th hour to act.
But even as negotiators say talks have been “productive,” they are in danger of running out of time.
Treasury Secretary Janet L. Yellen says the government might be unable to cover all its payment obligations as soon as June 1 — a week from Thursday. Other estimates say the so-called “X-date” when the money runs out might come anywhere in early June, but few analysts think there’s much more than a couple of weeks to maneuver.
Two prominent credit ratings agencies have warned in recent days that they could downgrade the U.S. government’s coveted AAA debt rating in the event of a default.
Morningstar noted in a research report Thursday that it has placed U.S. debt in review “with negative implications,” noting that it could decide on a downgrade even if the Biden administration and congressional Republicans reach a deal. Fitch similarly said Wednesday evening that it is watching U.S. debt because of “debt ceiling brinkmanship,” and could decide on a downgrade. Morningstar said it expected a deal and that any default would probably be over soon. A downgrade in 2011, when the U.S. narrowly averted a default, wound up costing more than $1 billion in higher interest costs in the ensuing years.
If negotiators do reach an agreement in principle, it would still need to be written into a bill — a process that could trigger new disagreements and tack more time onto the process. House rules pushed by conservatives as McCarthy sought the speakership in January also require 72 hours for lawmakers to review legislation before they can vote.
Then both chambers would need to vote on a bill, which could take days. At that point, the deadline could be measured in hours. On Thursday morning, Sen. Mike Lee (R-Utah) said on Twitter that any deal “will not face smooth sailing in the Senate” if it doesn’t include “substantial spending and budgetary reforms,” promising to “use every procedural tool” available to him to delay it.
The Senate is out of town, and McCarthy told reporters Wednesday night that House members would also be sent home Thursday for Memorial Day weekend, though they’d remain on notice to return if a deal comes together.
Neither side was ruling out the possibility of resolving the matter, at least.
“I still believe we have time to get an agreement, and get it done,” McCarthy told reporters after talks ended Wednesday.
“The talks continue,” White House spokeswoman Karine Jean-Pierre said at Wednesday’s briefing. “And we believe that there is still an opportunity here to get to a bipartisan, reasonable … agreement that Republicans and Democrats in the House and the Senate can move forward with.”
As of midday Thursday, White House and GOP negotiators were not scheduled to meet, though they have been in touch by phone. Bipartisan talks were held in person every other day this week. Any deal, though, will surely hinge on a direct agreement between McCarthy and Biden.
Some observers say the stalemate will persist until the threat of default becomes a bit more visceral.
“What changes? I don’t see why they would feel more concerned about defaulting tomorrow than they would today,” said Michael Strain, director of economic policy studies at the conservative American Enterprise Institute. “I don’t see why they would be, like, more willing to put country ahead of their own policy preferences tomorrow than they would be today. So it’s just, like, what changes? Something needs to change. And I think that needs to be a market event.”
Broadly, the parties are still haggling over how much the federal government should spend next year and how much, and for how long, to cap spending after that. Democrats still reject Republicans’ demands for work requirements for some federal assistance programs. But lawmakers were nearing agreement on how to advance permitting reform.
The administration’s negotiators — including Biden confidant Steve Ricchetti, Office of Management and Budget Director Shalanda Young and White House liaison to Congress Louisa Terrell — have stayed mum. Jean-Pierre on Wednesday said the GOP position was an unacceptable way to end “a manufactured crisis.”
“The president has made clear that he and congressional Democrats cannot support devastating cuts that would slash law enforcement, education and food assistance,” she said. “So we’ve been very clear on those pieces. We’ve said this over and over again.”
Other Democrats are continuing to worry about what an eventual deal might involve. In a news conference held by the Congressional Progressive Caucus, its chair, Rep. Pramila Jayapal (D-Wash.), said she was concerned Biden would end up making concessions that she would not agree with.
“We have been clear that any deal that the White House strikes — and I’ve had this numerous times privately in conversations, and we’ve said it publicly — any deal that the White House strikes has to be something that we House Democrats also are a part of and at the table for,” she said.
A few hours later, House Democratic leaders announced that their entire caucus — 213 Democrats — has signed onto a long-shot procedural maneuver that could force the House to vote on raising the debt ceiling even over McCarthy’s objections, known as a discharge petition. Democratic leadership said it would take five moderate Republicans to join them and lift the ceiling.
“I do not know how they are going to go home and look at our veterans this Memorial Day,” House Minority Whip Katherine M. Clark (D-Mass.) said. “It takes a handful of members of the GOP to say, ‘enough.' My message to them is: Be patriots.”
Mariana Alfaro, Camila Camila DeChalus, Rick Maese and Aaron Gregg contributed to this report.
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