A key House GOP negotiator warned Friday that efforts to lock down a debt limit deal could quickly come together or fall apart entirely — a warning sign as lawmakers and the White House is racing against the clock to try to get a deal to prevent a first. default.
“There is progress ahead,” Rep. Patrick McHenry, a chief GOP negotiator, told CNN after he left the House speaker’s office. “But every time there is progress, the issues that remain become more difficult and more challenging. So that’s step by step, little step by little step, and at some point, this thing will either … come together or go the other way.
But in a major development Friday afternoon that will give lawmakers more time to reach and pass a deal, Treasury Secretary Janet Yellen said Congress must address the debt ceiling by June 5 or the US Treasury does not have enough funds to pay all the countries. obligations in full and on time. Previously, Yellen estimated that the earliest possible default day could occur on June 1.
President Joe Biden said Friday night that he hopes to know by the end of the day whether a deal is possible. “There are negotiations going on. I’m hopeful we’ll know by tonight if we’re going to be able to have a deal,” he told reporters before he left Washington for the weekend.
“I hope we will have clearer evidence tonight, before 12, that we have an agreement. But it’s very close and I’m optimistic,” Biden added.
McHenry told reporters Friday night that he agreed with Biden’s assessment that they were close to a deal, saying that while there was no “white smoke,” he saw the president’s tone as “an optimistic one.” that sign.”
With no bill to vote on, House lawmakers also left town for the Memorial Day weekend and will be given 24 hours notice to return if and when a deal is reached.
There are signs that negotiations on raising the country’s debt limit have gained some momentum, but major differences between the two sides still remain and time is running out as the risk of default grows.
One of the most critical issues in the talks is spending cuts, which Republicans are demanding in exchange for voting to raise the debt limit. But there were also a series of outstanding issues beyond the level of spending on Thursday night, with the two sides far apart on work requirements for social safety net programs.
“Hell no,” Rep. Garret Graves, another key GOP negotiator, told CNN when asked if Republicans would be willing to drop work requirements on social safety net programs to get a deal on the debt ceiling.
“No, not a chance,” he said and suggested the issue centered on work rules for food stamps and temporary assistance programs for needy families, not Medicaid.
“Everything is complicated,” McHenry said. “Everybody wants the details but the bigger issue here is an agreement that changes the financial trajectory of our country. And that’s what we’re working on. And that makes it difficult. It has consequences.”
Asked if a deal could be reached Friday, House Speaker Kevin McCarthy stressed they are working as hard as they can.
“We know it’s a crunch time,” McCarthy said. “So we will work as hard, we worked all night last night. I thought we improved yesterday. I want to improve again today and I want to solve this problem.”
Under a potential deal being eyed by negotiators, the debt ceiling would be raised for two years while also capping federal spending — except for defense and veterans spending — for the same period, the two said. sources familiar with the negotiations. A separate source familiar with the negotiations said the two sides were still working out details on the length of the deal on the spending caps, which Democrats insist should last only until the increase in debt ceiling.
If and when an agreement is secured, the legislative text still needs to be written and congressional leaders need to lock down votes and ensure a bill passes both chambers. None of that is easy or immediate and any number of pitfalls can arise along the way.
The stakes continue to grow higher as the US moves closer to a potential default with each passing day.
Adding to the uncertainty is the fact that debt deadline forecasts are not clear cut. Rather than a set-in-stone deadline, they are more of a best estimate, making it more difficult to know how much time Congress needs to act to avoid potential disaster. finances – and raises the possibility that policymakers will inadvertently cause a default by not acting quickly.
The Treasury Department highlighted this uncertainty in urging Congress to act. “It is impossible to predict with certainty the exact date when the Treasury will be unable to pay all government bills,” Yellen wrote in her letter to McCarthy on Monday.
“We have learned from past debt limit defaults that waiting until the last minute to suspend or increase a debt limit can cause serious harm to business and consumer confidence, raising short-term borrowing costs. for taxpayers, and a negative impact on the credit rating of the United States,” warned Yellen.
This story has been updated with additional developments.