House Speaker Kevin McCarthy told his conference that the White House was still “dug in” on its stance in debt limit negotiations despite a Monday night meeting that both sides hailed as “productive,” according to a source familiar with this morning’s remarks.
“Members were told to remain flexible for next week” in case they have to return to vote for a new debt limit bill, the source said. “McCarthy said the White House is dug in on raising taxes and [increasing] spending but by a smaller amount than they would like.”
It lines up with reporting that White House negotiators have countered Republicans’ demand to cut spending to 2022 levels and cap it at 1% growth for the next decade with an offer to freeze current spending levels into the next fiscal year, with caps for one or two following years.
Speaker of the House Kevin McCarthy talks to reporters as he returns from a House Republican conference meeting on May 23, 2023. (Getty Images)
According to the source, McCarthy told members they have to “keep negotiating” and urged House Republicans to “stick together.”
He did not, however, offer fellow lawmakers any “points of agreement” forged between the White House and House GOP negotiators despite having roughly a week until the U.S. government is likely to run out of cash to pay all of its obligations.
House Speaker Kevin McCarthy, left, met with President Joe Biden, right, at the White House on Monday evening to discuss the debt limit. (Getty Images)
McCarthy later told reporters when he left the closed-door meeting that “we’re not there yet” in terms of a deal. He and Biden held their first bilateral meeting on the debt limit since February on Monday evening, with teams for both getting together afterward to continue working on a compromise.
Both House Speaker Kevin McCarthy, front, and Rep. Patrick McHenry, R-N.C., called the meeting productive afterward. (Getty Images)
But it appears both sides were still far apart as of Tuesday morning – though McCarthy expressed optimism that a deal could still be struck by June 1.
“They still want to spend more money next year than we spent this year. That’s a red line,” the speaker said. “We could still finish this by June … we’re trying to condense everything in a short time frame. The House passed the bill. The Senate never passed a bill. So, now it’s more difficult because of what else we have to negotiate from a lot of different perspectives. But we can still finish in time.”
Debt limit talks came to an abrupt standstill Friday after Republican House Speaker Kevin McCarthy said it’s time to “pause” negotiations, and a White House official acknowledged there are “real differences” that are making talks difficult. McCarthy said resolution to the standoff is “easy,” if only President Joe Biden would agree to some spending cuts Republicans are demanding. It is unclear when negotiations would resume.
“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.”
A White House official who was granted anonymity Friday to discuss the private conversations 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 the 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.
Negotiators met 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 that Biden has so far refused to accept. Any deal would need the support of both Republicans and Democrats to find approval in a divided Congress and be passed into law.
“Look, we can’t be spending more money next year,” McCarthy said at the Capitol. “We have to spend less than we spent the year before. It’s pretty easy.”
But McCarthy is facing a hard-right flank of Freedom Caucus and other Republican lawmakers that almost certain to oppose any deal with the White House. The internal political dynamics confronting the embattled McCarthy leaves the Democrats skeptical of giving away too much to the Republicans that drives away the Democrat support they will need to pass any compromise through the Congress.
Experts have warned that even the threat of a debt default would send shockwaves through the economy. Markets had been rising this week on hopes of a deal. But that shifted abruptly Friday after negotiators ended late morning an hour after they had begun.
Rep. Garret Graves, R-La., tapped by McCarthy to lead the talks, emerged from an hourlong session at the Capitol and said gaps remained between House Republicans and the Democrat administration.
“It’s time to press pause because it’s just not productive,” Graves told reporters.
He added that the negotiations have become “just unreasonable” and that it was unclear when talks would resume.
The S&P 500 went from a gain of 0.3% to a loss of 0.1% and the Dow Jones Industrial Average went from a gain of 117 points to a loss of about 90 points.
Biden departed early from a dinner with G7 leaders in Hiroshima on Friday night. White House press secretary Karine Jean-Pierre said Biden planned to be briefed on the negotiations by his team Friday evening.
As Republicans demand spending cuts and policy changes, Biden is facing increased pushback from Democrats, particularly progressives, not to give in to demands they argue will be harmful to Americans.
Another Republican negotiator, Rep. Patrick McHenry of North Carolina, said, “There is a “serious gap” between the sides.
“We’re in a tough spot,” said McHenry, the chairman of the House Financial Services Committee, as he left the meeting.
McCarthy faces pressures from his hard-right flank to cut the strongest deal possible for Republicans, and he risks a threat to his leadership as speaker if he fails to deliver.
A day earlier, the conservative House Freedom Caucus said there should be no further discussions until the Senate takes action on the House Republican bill that was approved last month to raise the debt limit into 2024 in exchange for spending caps and policy changes. Biden has said he would veto that Republican measure.
In the Senate, which is controlled by majority Democrats, the Republican leader Mitch McConnell has taken a backseat publicly, and is pushing Biden to strike a deal directly with McCarthy. McConnell blamed Biden for having “waited months before agreeing to negotiate” with the speaker.
“They are the only two who can reach an agreement,” McConnell said in a tweet. “It is past time for the White House to get serious. Time is of the essence.”
Democrats are wary of any deal with Republicans, and particularly refuse the Republican proposal to protect defense and veterans accounts from spending caps, arguing that the cuts will fall too heavily on other domestic programs. Republicans also want to impose stricter work requirements on government aid recipients. Biden has suggested he might be open to considering it, but Democrats in Congress have said is a nonstarter.
Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
Conventional wisdom holds that last week’s vote by the Republican-controlled House of Representatives to approve a debt limit and spending reduction bill is meaningless. Democrats called the legislation dead on arrival in the Senate, making whatever the House decides to do on its own irrelevant.
As with many things in Washington, the corporate media’s conventional wisdom is wrong.
Approving a debt limit bill did more than dispel the narrative that the Republican House, and Speaker Kevin McCarthy, R-Calif., will remain perpetually in disarray. By eliminating one of the major elements of Democrats’ political argument, it raised questions about their own strategic endgame.
House vs. Senate
Under the traditional, “Schoolhouse Rock” version of lawmaking, the House would pass its version of a bill, the Senate would pass its version, and the two would convene a House-Senate conference committee to reconcile the differences between the measures. That outcome seems unlikely regarding this debt limit increase.
Virtually all Democrats support a so-called “clean” debt limit increase. That is, they want to extend the limit on the nation’s credit card without any accompanying spending reforms. (They claim they will discuss spending levels in separate legislation, just not as part of the debt limit.)
But most legislation requires 60 votes to overcome a filibuster and advance in the Senate, and Democrats only hold 51 Senate seats. As a result, Majority Leader Chuck Schumer, D-N.Y., must persuade nine Republicans — 10 if Sen. Dianne Feinstein, D-Calif., who continues to recover from a case of shingles in California, remains absent from the Senate — to approve a clean debt limit increase for the measure to clear the chamber. That scenario appears unlikely, as Minority Leader Mitch McConnell, R-Ky., would lean on his troops not to approve a Schumer-led measure.
Indeed, Schumer may not bring a debt limit bill to the Senate floor at all, rather than wasting precious days of the Senate schedule on a measure he believes will fail. But this strategy would allow members in the lower chamber to ask an obvious question: The House did its work, and approved a debt limit bill — why won’t the Senate do the same?
Republicans Get to ‘Yes’
But amid the larger debate about the debt limit and fiscal policy, a key point about last week’s events has somehow gotten lost. Democrats continue to decry supposed Republican “hostage taking,” alleging that conservative lawmakers are threatening to ruin the country’s full faith and credit unless Democrats acquiesce to their demands.
Ignore for a moment the not-insignificant question of whether the Treasury Department can prioritize government payments in the event Congress doesn’t increase the debt limit, so as to prevent a default on government bonds and protect the country’s credit rating. The Democratic argument in large part rests on the premise that Republican lawmakers would never vote to raise the debt limit.
All the talk about “hostage taking” — which the left has utilized ever since the Republican takeover of the House in 2010-11 turned the debt limit into a bigger political issue — might have merit if lawmakers under no circumstances would vote to increase the debt limit. If there is no possible way someone will vote for a debt limit increase, if a lawmaker’s vote isn’t “gettable,” to use the Beltway parlance, then yes, one might credibly accuse conservatives of wanting to sabotage the country’s credit rating, just to make a point.
That’s where last week’s vote proved revealing, and decisive. Numerous conservative members of Congress, who in the past had never supported legislation that raised the debt limit, voted last week for a bill to do just that. People like my friend and former think-tank colleague Rep. Chip Roy, R-Texas, probably didn’t like the idea of raising the debt limit, but they did it.
After last Wednesday’s vote, Democrats can’t claim conservatives amount to legislative nihilists who can’t get to “yes” on an issue. Instead, they don’t like the fact that Republicans said “yes” to raising the debt limit and “yes” to reforming federal spending. They can no longer attack Republicans for not approving the debt limit, so now they will try to attack Republicans for the way in which they did so.
That position amounts to an attempt to dictate both sides of the debate. It’s the legislative equivalent of a tennis player whining, “You didn’t hit the ball to me the right way.” It holds a particular irony given quotes like the following: “I cannot agree to vote for a full increase in the debt without any assurance that steps will be taken early next year to reduce the alarming increase in the deficits and the debt.”
That quote comes from none other than Joe Biden himself, circa 1984. Given the way in which he and many other Democrats previously supported the notion of linking a debt limit increase to spending reforms, this egregious flip-flop undermines the integrity of their position still further.
Now that Republicans in the House have agreed to a debt limit bill, Democrats should agree to get in a room, figure out each side’s position, and arrive at an agreement that will hopefully increase the debt limit while addressing the nation’s calamitous fiscal state. It’s called “legislating” — Congress actually doing its job.
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