Debt limit talks resume at Capitol as Republicans, White House face ‘real differences’
WASHINGTON – Debt limit talks resumed at the U.S. Capitol late Friday, a sudden turnaround after negotiations came to an abrupt standstill earlier in the day when Republican House Speaker Kevin McCarthy said it’s time to “pause” negotiations, and a White House official acknowledged there are “real differences.”
The official, who was granted anonymity to talk about the private discussions, confirmed late Friday the talks were back on.
Earlier in the day, McCarthy said resolution to the standoff is “easy,” if only Democratic President Joe Biden’s team would agree to some spending cuts Republicans are demanding. The biggest impasse was over the fiscal 2024 top-line budget amount, according to another person briefed on the talks and granted anonymity to discuss them. Democrats staunchly oppose the steep reductions Republicans have put on the table as potentially harmful to Americans.
“We’ve got to get movement by the White House and we don’t have any movement yet,” McCarthy, R-Calif., told reporters at the Capitol. “So, yeah, we’ve got to pause.”
The White House official said there are “real differences” between the parties on the budget issues and further “talks will be difficult.”
The official added that the president’s team is working hard towards a “reasonable bipartisan solution” that can pass both the House and the Senate.
Biden’s administration is racing to strike a deal with Republicans led by McCarthy as the nation careens toward a potentially catastrophic debt default if the government fails to increase the borrowing limit, now at $31 trillion, to keep paying the nation’s bills.
Wall Street turned lower as negotiations on raising the nation’s debt limit came to a sudden halt, raising worries that the country could edge closer to risking a highly damaging default on U.S. government debt.
The president who has been in Japan attending the Group of Seven summit had no immediate comment. Biden had already planned to cut short the rest of his trip and he is expected to return to Washington later Sunday.
White House press secretary Karine Jean-Pierre said Biden planned to be briefed on the negotiations by his team Friday evening. Biden had departed early from a Friday night dinner with G7 leaders in Hiroshima.
Negotiators met Friday for a third day behind closed doors at the Capitol with hopes of settling on an agreement this weekend before possible House votes next week. They face a looming deadline as soon as June 1 when the Treasury Department has said it will run out of cash to pay the government’s incurred debt.
Republicans want to extract steep spending cuts arguing the nation’s deficit spending needs to get under control, rolling back spending to fiscal 2022 levels and restricting future growth. But Biden’s team is countering that the caps Republicans proposed in their House-passed bill would amount to 30% reductions in some programs if Defense and veterans are spared, according to a memo from the Office of Management and Budget.
Any deal would need the support of both Republicans and Democrats to find approval in a divided Congress and be passed into law. Negotiators are eyeing a more narrow budget cap deal of a few years, rather than the decade-long caps Republicans initially wanted, and clawing back some $30 billion of unspent COVID-19 funds.
Still up for debate are policy changes, including a framework for permitting reforms to speed the development of energy projects, as well as the Republican push to impose work requirements on government aid recipients that Biden has been open to but the House Democratic leader Hakeem Jeffries has said was a “nonstarter.”