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HomeBusinessThe debt ceiling deadline is approaching fast, but talks are still slow

The debt ceiling deadline is approaching fast, but talks are still slow


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With the debt ceiling deadline dwindling to a matter of days, the issues under discussion between the White House and congressional Republicans are “narrowing,” House Majority Leader Steve Scalise (R-La.) said Thursday. But there was still no certain path to avoiding a calamitous default before the government runs out of money.

Going into the holiday weekend, a familiar rhythm had set in on Capitol Hill. Talks never imploded or paused altogether, as they did the week before. Negotiators appeared to trudge from one meeting to the next, without indicating much concrete progress. Even as the need to find agreement intensified, House Republicans and the White House remained at odds over the extent and duration of new restrictions on federal spending, with each side accusing the other of violating their respective red lines.

On Wednesday, the bipartisan discussions were held at the White House and lasted roughly four hours. Earlier in the week on Capitol Hill, Biden’s negotiators stayed tight-lipped as they shuttled to and from their black van to House Speaker Kevin McCarthy’s (R-Calif.) office.

Republicans, meanwhile, have repeatedly held court with reporters, saying there are still “significant gaps,” and that they had already made a concession to Democrats by offering to raise the debt ceiling. But by Thursday morning, some signs of progress were emerging.

“We know where our differences lie. We worked well past midnight last night. We’re back at it today, trying to get to the conclusion that can solve this problem,” McCarthy told reporters Thursday. “We’ve already talked to the White House today. We’ll continue to work. They’re working on numbers. We’re working on numbers.”

There is always the possibility that talks could turn around quickly. As recently as Monday, after McCarthy and Biden met in the Oval Office, both leaders emerged with a more upbeat tone. Republicans and Democrats have also consistently said that the United States will not default on its debt. And Congress often seems to prefer to wait until the 11th hour to act.

But even as negotiators say talks have been “productive,” they are in danger of running out of time.

Treasury Secretary Janet L. Yellen says the government might be unable to cover all its payment obligations as soon as June 1 — a week from Thursday. Other estimates say the so-called “X-date” when the money runs out might come anywhere in early June, but few analysts think there’s much more than a couple of weeks to maneuver.

Two prominent credit ratings agencies have warned in recent days that they could downgrade the U.S. government’s coveted AAA debt rating in the event of a default.

Morningstar noted in a Thursday research report Thursday that it has placed U.S. debt in review “with negative implications,” noting that it could decide on a downgrade even if the Biden administration and congressional Republicans reach a deal. Fitch similarly said Wednesday evening that it is watching U.S. debt because of “debt ceiling brinkmanship,” and could decide on a downgrade. Morningstar said they expected a deal and that any default would probably be over soon. A downgrade in 2011, when the U.S. narrowly averted a default, wound up costing more than $1 billion in higher interest costs in the ensuing years.

If negotiators do reach an agreement in principle, it would still need to be written into a bill — a process that could trigger new disagreements and tack more time onto the process. House rules pushed by conservatives as McCarthy sought the speakership in January also require 72 hours for lawmakers to review legislation before they can vote.

Then both chambers would need to vote on a bill, which could take days. At that point, the deadline could be measured in hours. On Thursday morning, Sen. Mike Lee (R-Utah) said on Twitter that any deal “will not face smooth sailing in the Senate” if it doesn’t include “substantial spending and budgetary reforms,” promising to “use every procedural tool” available to him to delay it.

The Senate is out of town, and McCarthy told reporters Wednesday night that House members would also be sent home Thursday for Memorial Day weekend, though they’d remain on notice to return if a deal comes together.

Neither side was ruling out the possibility of resolving the matter, at least.

“I still believe we have time to get an agreement, and get it done,” McCarthy told reporters after talks ended Wednesday.

“The talks continue,” White House spokeswoman Karine Jean-Pierre said at Wednesday’s briefing. “And we believe that there is still an opportunity here to get to a bipartisan, reasonable … agreement that Republicans and Democrats in the House and the Senate can move forward with.”

White House and GOP negotiators have met every day this week. Any deal will surely hinge on a direct agreement between McCarthy and Biden, but as of Wednesday evening, they didn’t have another meeting set.

Some observers say the stalemate will persist until the threat of default becomes a bit more visceral.

“What changes? I don’t see why they would feel more concerned about defaulting tomorrow than they would today,” said Michael Strain, director of economic policy studies at the conservative American Enterprise Institute. “I don’t see why they would be, like, more willing to put country ahead of their own policy preferences tomorrow than they would be today. So it’s just, like, what changes? Something needs to change. And I think that needs to be a market event.”

The Dow Jones Industrial Average fell for a fourth straight day Wednesday as worries ricocheted through Wall Street that an agreement might not come.

GOP unites in brinkmanship over default, rejecting Biden compromises

Broadly, the parties are still haggling over how much the federal government should spend next year and how much, and for how long, to cap spending after that. Democrats still reject Republicans’ demands for work requirements for some federal assistance programs. And the two parties are split on how to advance permitting reform.

“I’m going to throw out a number…but there are probably 50 categories that we’re discussing holistically, and some of them we’ve made substantial progress,” Rep. Garret Graves (R-La.), one of McCarthy’s frontmen in the talks, told reporters Tuesday. “But just keep in mind the number of things that we’re negotiating here. I mean, this has to do with trillions of dollars. It has to do with the nation’s trajectory of spending. And it’s trying to enforce a paradigm shift, in the growth in spending, the growth in debts and deficits, that are unsustainable.”

The administration’s negotiators — including Biden confidante Steve Ricchetti, Office of Management and Budget Director Shalanda Young and White House liaison to Congress Louisa Terrell — have stayed mum. Jean-Pierre on Wednesday said the GOP position was an unacceptable way to end “a manufactured crisis.”

“The president has made clear that he and congressional Democrats cannot support devastating cuts that would slash law enforcement, education and food assistance,” she said. “So we’ve been very clear on those pieces. We’ve said this over and over again.”

Other Democrats are continuing to worry about what an eventual deal might involve. In a news conference held by the Congressional Progressive Caucus, its chair, Rep. Pramila Jayapal (D-Wash.), said she was concerned Biden would end up making concessions that she would not agree with.

“We have been clear that any deal that the White House strikes — and I’ve had this numerous times privately in conversations, and we’ve said it publicly — any deal that the White House strikes has to be something that we House Democrats also are a part of and at the table for,” she said.

A few hours later, House Democratic leaders announced that their entire caucus — 213 Democrats — has signed onto a long-shot procedural maneuver that could force the House to vote on raising the debt ceiling even over McCarthy’s objections, known as a discharge petition. Democratic leadership said it would take five moderate Republicans to join them and lift the ceiling.

“I do not know how they are going to go home and look at our veterans this Memorial Day,” said House Minority Whip Katherine M. Clark (D-Mass.). “It takes a handful of members of the GOP to say, ‘enough.’ My message to them is: Be patriots.”

Aaron Gregg contributed to this report.

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