Democratic and Republican negotiators struggled on Friday to reach a deal to raise the $31.4 trillion U.S. government debt ceiling, as one key Republican cited disagreements over work requirements for some benefit programs for low-income Americans.
Treasury Secretary Janet Yellen said on Friday that the United States will run out of money to pay its bills by June 5, a slight extension of her previous forecast of June 1.
The talks were reported to be closing in, as lawmakers sought to avoid a catastrophic and unprecedented stumble. Stocks on Wall Street and European stocks rose as the White House and congressional Republicans worked on the final touches to a package to present to Congress.
Reuters quoted a US official as saying that the negotiators appeared to be close to concluding a deal to raise the ceiling for two years and limit spending, by agreeing to fund the Internal Revenue Service and the army. But a White House official told the same whistleblower that the talks could easily slide into the weekend.
The lawmakers were placed on call after they left Washington for the Memorial Day weekend.
“We’ve made progress,” Republican chief negotiator Garrett Graves told reporters. “I said a couple of days ago, we had some progress being made on some key issues, but I want to be clear, we still have major issues that we haven’t closed the gap on, chief among them business requirements.”
Republican House Speaker Kevin McCarthy told reporters at the Capitol: “We know it’s time. We’re not just trying to get an agreement, we’re trying to get something that’s worth the American people, and changes course.”
Democrats indicated that Joe Biden was willing to consider spending cuts, including planned additional funding for the IRS, a target of attacks from the right, The Washington Post reported. Quoting an anonymous official, Reuters said the deal would raise the cap for two years “while capping spending on everything but the military and veterans.”
On Thursday night, North Carolina congressman Patrick McHenry said, “I think there’s a sense of understanding from both teams that we have serious issues that we still have to work out and come to terms with, and that’s going to take time. That’s all there is.”
Any deal must pass the House and Senate, which usually takes days to complete.
Yellen warned months ago that failure to raise the debt ceiling would be a “catastrophe”. In a letter to Congress released Friday, she said the federal government was scheduled to make more than $130 billion in payments in the first few days of June, including payments to veterans and Social Security and Medicare recipients, leaving the Treasury with a “low level.” Too resourceful.”
Raising the debt ceiling is usually a formality, if subject to political opportunity. Republicans raised the ceiling without preconditions three times under Donald Trump, while increasing the debt through tax cuts and spending increases.
But McCarthy only has a five-seat majority and is beholden to the far right in his party, which is demanding tough cuts.
On Thursday, White House press secretary Karen Jean-Pierre told reporters, “We’re fighting against an extreme and devastating Republican proposal that would cut … law enforcement, education, food assistance, all of those things that are essential to American families who are just trying to make ends meet.”“
Most analysts say a default will throw the global economy into market chaos and potential recession. This week, the US Treasury’s cash balance fell to $49.5 billion, prompting Bloomberg TV. a report: “There are 24 individuals on the Bloomberg Billionaires List who have more money than the Treasury has right now.”
Reuters spoke to David Beers, the former head of sovereign ratings at Standard & Poor’s, who in 2011 responded to a similar debt crisis triggered by Republicans by downgrading the United States, a move that destabilized the market.
“We thought the country’s political polarization was likely to continue, and secondly, we were also concerned about the growing trajectory of debt,” Byers said. “In both of our cases, our expectations were exceeded, if anything…. I have no doubt that this was the right call.”
Now, some on the Republican right, including Trump, the former president and current presidential candidate, say the party should let the United States default if Biden refuses to obey.
Deputy Treasury Secretary Wally Ademo told CNN that the government does not have the power to “sort out” payments if the debt ceiling is not raised. Adimo also said that invoking the Fourteenth Amendment — which says “the public religion shall not be questioned” — would not solve the problem.
“I don’t have any confidence that we have the ability to do the kind of prioritization that will mean all seniors, all veterans, all Americans get paid,” Adimo said.
Some House Democrats are chafing at their exclusion from the negotiations, and at the way Biden has provided advisors instead of consistently engaging. Democrats also bemoaned how Republicans won the war of letters, and public opinion polls showed support for spending cuts — and raising the ceiling.
Rosa DeLauro, of Connecticut, told Politico: “The size of the cuts [demanded by Republicans] It is an amazing thing, which the public knows very little about. The boss should be there.”
Biden was scheduled to meet the winning basketball teams at the White House on Friday, then travel to the presidential retreat at Camp David, Maryland.
“They need to use the power of the presidency… I need the American people to know that the Democrats here are fighting, working, ready to make a deal to avoid default and only the White House, the president, He can explain it at this moment.”
Biden did not remain silent. On Thursday, at the White House, he said Republicans wanted “massive cuts” that would hurt ordinary Americans.
“Now is the time for Congress to act,” he said, adding, “Under my administration, we’ve already cut the deficit by $1.7 trillion in our first three years. But Speaker McCarthy takes a very different view of who should bear the brunt of additional efforts to get our fiscal house in order.”
I don’t think the entire burden should fall on the American middle class and working class. My Republican friends in my house disagree with them.”