Republican lawmaker Kevin McCarthy said on Saturday that there are signs of “progress” in talks with Democratic President Joe Biden on limiting the U.S. federal government’s debt. The development comes as the nation faces the threat of default in little more than a week.
Time is of the essence, as the Treasury Department recently announced that the government will run out of funds to cover all of its bills on June 5 unless Congress acts. This revised deadline is a bit later but stronger than the earlier default forecast of June 1.
However, even if a deal in principle is reached between Biden and House Speaker McCarthy, it could take up to a week to pass legislation through a divided Congress because of the tight and tight divisions within. From.
“We don’t have a deal … we’re not there yet. We made progress, we worked well into the early hours of the morning. And now we’re back at it,” McCarthy told reporters. “
Hard-line Republicans have threatened to block any bill that doesn’t meet their expectations, including significant spending cuts. Progressive Democrats, on the other hand, have threatened to withhold support for compromises that include new work requirements for federal anti-poverty programs.
“It’s very close and I’m optimistic,” Biden told reporters Friday, expressing optimism.
With Republicans holding a slim 222-213 majority in the House and Democrats holding a 51-49 Senate majority, any deal between the Democratic president and the Republican speaker would need to pass a narrow path to pass into law. .
Republicans aim to cut government spending over the next decade to slow the growth of the U.S. debt, which is currently equal to the economy’s annual output. However, the tentative deal is expected to fall well short of their target.
Both sides have tentatively agreed to raise the debt ceiling to meet the country’s borrowing needs until the November 2024 presidential election. The deal would include increased spending on military and veterans care while limiting spending for many discretionary domestic programs.
Republicans are also pushing for energy permitting reforms, including easing restrictions on gas and oil drilling, McCarthy said.
Even before reaching an agreement, some members of McCarthy’s conservative caucus have expressed objections. Rep. Dan Bishop, a Republican, expressed anger at the idea of raising the debt ceiling through the next presidential election, tweeting, “If the Speaker’s negotiators bring back a clean debt ceiling increase… one so big.” That it protects Biden from that as well. The presidential affair … it’s war.”
Key points of negotiation include Republicans’ rejection of Biden’s proposed tax hikes and neither side’s willingness to address rapidly expanding health and retirement programs that contribute to the mounting debt. .
Congress’ failure to raise the self-imposed debt ceiling before June 5 could trigger a default that would hit financial markets and plunge the United States into a deeper recession. Credit rating agencies have put the United States on review for a potential downgrade, which would raise borrowing costs and weaken its position as a cornerstone of the global financial system. A similar default in 2011 led to Standard & Poor’s downgrading of US debt, leading to market turmoil and higher borrowing costs for the government.