Debt ceiling deadline now June 5
— Upending debt-ceiling talks with time running short, the government announced a new June 5 default deadline late Friday, dragging the White House and Republicans toward another week of cliff-edge negotiations over cutting spending and raising the nation’s legal debt limit.
The new date, set out in a letter from Treasury Secretary Janet Yellen, came with Americans and the world already highly concerned about U.S. brinkmanship.
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 were already making contingency plans for missed checks, with the next Social Security payments due next week.
The new deadline, a week from Monday, is four days later than earlier expected. Yellen said all “extraordinary measures” Treasury has resorted to would be exhausted.
The sudden announcement was likely to scramble talks between President Joe Biden and House Speaker Kevin McCarthy. They were narrowing on a two-year budget-slashing deal that would also extend the debt limit past the next presidential election. After frustrating rounds of closed-door talks, a compromise had appeared to be nearing on Friday.
But more time, even a few days from the earlier deadline, can be an eternity in Washington as the two sides engage in hard-edged dealmaking.
Republicans have made some headway in their drive for steep spending cuts that Democrats oppose. However, the sides are particularly “dug in” 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 with Biden as lawmakers broke for the long Memorial Day holiday weekend.
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 shockwaves through the U.S. and global economy.
But many of the hard-right Trumpaligned Republicans in Congress have long been skeptical of Treasury’s projections, and they are pressing McCarthy to hold out.
The deal’s within reach, it just has to be agreed to,” said Rep. Patrick McHenry, R-N.C., one of the negotiators.
In remarks optimistic comments earlier at the White House before Yellen’s letter was released, Biden gave a shoutout to one of this top negotiators saying she’s “putting together a deal, hopefully.”
He was referring to Office of Management and Budget Director Shalanda Young who attended a salute to the Louisiana State women’s national basketball champions.
While the contours of the deal have been taking shape to cut spending for 2024 and impose a 1% cap on spending growth for 2025, the two sides remain stuck on various provisions. The debt ceiling, now at $31 trillion, would be lifted for two years to pay the nation’s incurred bills.
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.