WASHINGTON — US President Joe Biden said a deal to resolve the government’s debt ceiling crisis seemed “very close” late Friday, May 26, 2023, even as the deadline for a potentially catastrophic default was pushed back to June 5 and seemed likely to drag negotiations between the White House and Republicans into another frustrating week.
The later “X-date,” laid out in a letter from Treasury Secretary Janet Yellen, set the risk of a devastating default four days beyond an earlier estimate. It came as Americans and the world uneasily watched the negotiating brinkmanship that could throw the US economy into chaos and sap world confidence in the nation’s leadership.
Yet Biden was upbeat as he left for the Memorial Day weekend at Camp David, declaring, “It’s very close, and I’m optimistic.”
With Republicans at the Capitol talking with Biden’s team at the White House, the president said: “There’s a negotiation going on. I’m hopeful we’ll know by tonight whether we’re going to be able to have a deal.” But a deal had not come together by the time Republican House Speaker Kevin McCarthy left the Capitol late Friday.
Severe hardship
In a blunt warning, Yellen said failure to act by the new date would “cause severe hardship to American families, harm our global leadership position and raise questions about our ability to defend our national security interests.”
Anxious retirees and others were already making contingency plans for missed checks, with the next Social Security payments due next week.
Biden and McCarthy seemed to be narrowing on a two-year budget-slashing deal that would also extend the debt limit into 2025 past the next presidential election. After frustrating rounds of closed-door talks, a compromise had appeared to be nearing on Friday.
Republicans have made some headway in their drive for steep spending cuts that Democrats oppose. However, the sides are particularly divided over McCarthy’s demands for tougher work requirements on government food stamp recipients that Democrats say is a nonstarter.
Earlier Friday, McCarthy said his Republican debt negotiators and the White House had hit “crunch” time, straining to wrap up an agreement.
Any deal would need to be a political compromise, with support from both Democrats and Republicans to pass the divided Congress. Failure to lift the borrowing limit, now $31 trillion, to pay the nation’s incurred bills, would send shock waves through the US and global economy.
But many of the hard-right Trump-aligned Republicans in Congress have long been skeptical of Treasury’s projections, and they are pressing McCarthy to hold out.
‘Hopeful sign’
As talks pushed into another late night, one of the negotiators, Rep. Patrick McHenry, R-N.C., called Biden’s comments “a hopeful sign.” But he also cautioned that there’s still “sticky points” impeding a final agreement.
While the contours of the deal have been taking shape to cut spending for 2024 and impose a one percent cap on spending growth for 2025, the two sides remain stuck on various provisions.
A person familiar with the talks said the two sides were “dug in” on whether or not to agree to Republican demands to impose stiffer work requirements on people who receive government food stamps, cash assistance and health care aid.
House Democrats have called such requirements for health care and food aid a nonstarter.
Asked if Republicans would relent on work requirements, Republican negotiator Rep. Garret Graves of Louisiana fumed, “Hell no, not a chance.”
House Republicans displayed risky political bravado in leaving town for the holiday. Lawmakers are tentatively not expected back at work until Tuesday, but now their return date is uncertain.
“The world is watching,” International Monetary Fund managing director Kristalina Georgieva said after meeting Friday with Yellen. “Let’s remember we are now in the 12th hour.”
Weeks of negotiations between Republicans and the White House have failed to produce a deal — in part because the Biden administration resisted negotiating with McCarthy over the debt limit, arguing that the country’s full faith and credit should not be used as leverage to extract other partisan priorities. / AP