Tag: National debt

WASHINGTON — President Joe Biden says he “feels good” about the debt ceiling and budget deal negotiated with House Speaker Kevin McCarthy as the White House and congressional leaders work to ensure its passage this week in time to lift the nation’s borrowing limit and prevent a disastrous U.S. default.

Biden spent part of the Memorial Day holiday working the phones, calling lawmakers in both parties, as the president does his part to deliver the votes. A number of hard right conservatives are criticizing the deal as falling short of the deep spending cuts they wanted, while liberals decry policy changes such as new work requirements for older Americans in the food aid program.

A key test will come Tuesday afternoon when the House Rules Committee is scheduled to consider the package and vote on sending it to the full House for a vote expected Wednesday.

“I feel very good about it,” Biden told reporters Monday as he left Washington for his home in Delaware.

“I’ve spoken to a number of the members,” he said, among them Senate Republican leader Mitch McConnell, a past partner in big bipartisan deals who largely sat this one out.

“I spoke to a whole bunch of people, and it feels good,” Biden said.

To those progressive Democrats raising concerns about the package, the president had a simple message: “Talk to me.”

As lawmakers size up the 99-page bill, few are expected to be fully satisfied with the final product. But Democrat Biden and Republican McCarthy are counting on pulling majority support from the political center, a rarity in divided Washington, to join in voting to prevent a catastrophic federal default.

Wall Street will open early Tuesday morning delivering its own assessment, as the U.S. financial markets that had been closed when the deal was struck over the weekend show their reaction to the outcome.

McCarthy acknowledged the hard-fought compromise with Biden will not be “100% of what everybody wants” as he leads a slim House majority powered by hard-right conservatives.

Facing potential blowback from his conservative ranks, the Republican speaker will have to rely on upwards of half the House Democrats and half the House Republicans to push the debt ceiling package to passage.

Overall, the package is a tradeoff that would impose some spending reductions for the next two years along with a suspension of the debt limit into January 2025, pushing the volatile political issue past the next presidential election. Raising the debt limit, now $31 trillion, would allow Treasury to continue borrowing to pay the nation’s already incurred bills.

Additionally, policy issues are raising the most objections from lawmakers.

Liberal lawmakers fought hard but were unable to stop new work requirements for people 50 to 54 who receive government food assistance and are otherwise able-bodied without dependents. The Republicans demanded the bolstered work requirements as part of the deal, but some say the changes to the food stamp program are not enough.

The Republicans were also pushing to beef up work requirements for health care and other aid; Biden refused to go along on those.

Questions are also being raised about an unexpected provision that essentially gives congressional approval to the Mountain Valley Pipeline, a natural gas project important to Sen. Joe Manchin, D-W.Va., that many Democrats and others oppose.

At the same time, conservative Republicans including those from the House Freedom Caucus say the budget slashing does not go nearly far enough to have their support.

“No one claiming to be a conservative could justify a YES vote,” tweeted Rep. Bob Good, R-Va.

This “deal” is insanity,” said Rep. Ralph Norman, R-S.C. “Not gonna vote to bankrupt our country.”

All told the package would hold spending essentially flat for the coming year, while allowing increases for military and veterans accounts. It would cap growth at 1% for 2025.

The House Rules Committee has three members from the influential Freedom Caucus who may very well try to block the package from advancing, forcing McCarthy to rely on the Democrats on the panel to ensure the bill can be sent to the House floor.

The House aims to vote Wednesday and send the bill to the Senate, where Majority Leader Chuck Schumer along with McConnell are working for a quick passage by week’s end.

Senators, who have remained largely on the sidelines during much of the negotiations between the president and the House speaker, began inserting themselves more forcefully into the debate.

Some senators are insisting on amendments to reshape the package from both the left and right flanks. That could require time-consuming debates that delay final approval of the deal.

Democratic Sen. Tim Kaine of Virginia is “extremely disappointed” by the provision greenlighting the controversial Mountain Valley Pipeline, his office said in a statement. He plans to file an amendment to remove the provision from the package.

Republican Sen. Lindsey Graham of South Carolina complained that the military spending increases are not enough. “I will use all powers available to me in the Senate to have amendment votes to undo this catastrophe for defense,” he tweeted.

But making any changes to the package at this stage seems highly unlikely with so little time to spare. Congress and the White House are racing to meet the Monday deadline now less than a week away. That’s when Treasury Secretary Janet Yellen has said the U.S. would run short of cash and face an unprecedented debt default without action.

A default would almost certainly crush the U.S. economy and spill over around the globe, as the world’s reliance on the stability of the American dollar and the country’s leadership fall into question.

___

Associated Press writers Darlene Superville, Mary Clare Jalonick and Farnoush Amiri contributed to this report.

WASHINGTON — President Joe Biden and House Speaker Kevin McCarthy reached an “agreement in principle” to raise the nation’s legal debt ceiling, but now Congress must rush to approve the spending cuts package in a matter of days to avert a potentially disastrous U.S. default.

The agreement risks angering both Democratic and Republican sides as lawmakers Sunday begin to unpack the the concessions made to compromise. Negotiators agreed to some Republican demands for increased work requirements for recipients of food stamps that had sparked an uproar from House Democrats as a nonstarter. But they stopped short of greater spending cuts overall that Republicans wanted.

Support from both parties will be needed to win congressional approval before a projected June 5 government default on U.S. debts.

The Democratic president and Republican speaker reached the agreement after the two spoke Saturday evening by phone. The country and the world have been watching and waiting for a resolution to a political standoff that threatened the U.S. and global economies.

“The agreement represents a compromise, which means not everyone gets what they want,” Biden said in a statement late Saturday night. “That’s the responsibility of governing,” he said.

Biden called the agreement “good news for the American people, because it prevents what could have been a catastrophic default and would have led to an economic recession, retirement accounts devastated, and millions of jobs lost.”

McCarthy in brief remarks at the Capitol said that “we still have a lot of work to do.”

But the Republican speaker said: “I believe this is an agreement in principle that’s worthy of the American people.”

With the outlines of a deal in place, the legislative package could be drafted and shared with lawmakers in time for House votes as soon as Wednesday, and later next week in the Senate.

Central to the package is a two-year budget deal that would hold spending flat for 2024 and increase it by 1% for 2025 in exchange for raising the debt limit for two years, pushing the volatile political issue past the next presidential election.

Driving hard for a deal to impose tougher work requirements on government aid recipients, Republicans achieved some but not all of what they wanted. The agreement would raise the age for existing work requirements on able-bodied adults without children from 49 to 54, but Biden was able to secure waivers for veterans and the homeless.

The two sides had also reached for an ambitious overhaul of federal permitting to ease development of energy projects. Instead, the agreement would put in place changes in the landmark 1970s’ National Environmental Policy Act that will designate “a single lead agency” to develop environmental reviews, in hopes of streamlining the process.

The deal came together after Treasury Secretary Janet Yellen told Congress that the United States could default on its debt obligations by June 5 — four days later than previously estimated — if lawmakers did not act in time. Lifting he nation’s debt limit, now at $31 trillion, allows more borrowing to pay the nation’s already incurred bills.

Biden also spoke earlier in the day with Democratic leaders in Congress to discuss the status of the talks. White House officials will brief House Democrats on a Sunday video call.

McCarthy commands only a slim Republican majority in the House, powered by hard-right conservatives who may resist any deal as insufficient as they try to slash spending. But compromising with Democrats for votes, he risks losing support from his own rank-and-file, setting up a careerchallenging mo-ment for the new speaker.

Both sides have suggested one of the main holdups was a GOP effort to expand work requirements for recipients of food stamps and other federal aid programs, a longtime Republican goal that Democrats have strenuously opposed. The White House said the Republican proposals were “cruel and senseless.”

Biden has said the work requirements for Medicaid would be a nonstarter. He had seemed potentially open to negotiating changes on food stamps, now known as the Supplemental Nutrition Assistance Program, or SNAP, despite objections from rank-and-file Democrats.

Americans and the world were uneasily watching the negotiating brinkmanship that could throw the U.S. and global economy into chaos and sap world confidence in the nation’s leadership.

Anxious retirees and others were already making contingency plans for missed checks, with the next Social Security payments due next week.

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.”

Any deal would need to be a political compromise in a divided Congress. Many of the hard-right Trump-aligned Republicans in Congress have long been skeptical of the Treasury’s projections, and they are pressing McCarthy to hold out.

Lawmakers are not expected to return to work from the Memorial Day weekend before Tuesday, at the earliest, and McCarthy has promised lawmakers he will abide by the rule to post any bill for 72 hours before voting.

___

Associated Press writers Stephen Groves, Fatima Hussein, Farnoush Amiri, Seung Min Kim and video journalist Rick Gentilo contributed to this report.

WASHINGTON — Work requirements for federal food aid recipients have emerged as a final sticking point in negotiations over the looming debt crisis, even as President Joe Biden said a deal is “very close.”

Biden’s optimism, in comments to reporters as he left the White House on Friday evening, came as the deadline for a potentially catastrophic default was pushed back to June 5 and seemed likely to drag negotiations between the White House and Republicans over raising the debt ceiling into another frustrating week.

House negotiators departed the Capitol after 2 a.m. Saturday without a deal. They were expected to return hours later in hopes of reaching agreement with the White House over the holiday weekend.

Both sides have suggested one of the main holdups is a GOP effort to expand existing work requirements for recipients of food stamps and other federal aid programs, a longtime Republican goal that Democrats have strenuously opposed.

Even as they came closer to a framework on spending, each side seemed dug in on the work requirements. White House spokesman Andrew Bates called the GOP proposals “cruel and senseless” and said Biden and Democrats would stand against them.

Louisiana Rep. Garret Graves, one of House Speaker Kevin McCarthy’s negotiators, was blunt when asked if Republicans might relent on the issue: “Hell no, not a chance.”

The later “ X-date, ” laid out in a letter from Treasury Secretary Janet Yellen, set the risk of a devastating default four days beyond an earlier estimate. Still, Americans and the world uneasily watched the negotiating brinkmanship that could throw the U.S. economy into chaos and sap world confidence in the nation’s leadership.

Yet Biden was upbeat as he departed for Camp David: “It’s very close, and I’m optimistic.”

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. 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 and others were already making contingency plans for missed checks, with the next Social Security payments due next week.

Biden and McCarthy, R-Calif., have seemed to be narrowing on a two-year budget-slashing deal that would also extend the debt limit into 2025 past the next presidential election. The contours of the deal have been taking shape to cut spending for 2024 and impose a 1% cap on spending growth for 2025.

But talks over the proposed work requirements for recipients of Medicaid, food stamps and other aid programs seemed at a standstill Friday afternoon.

Biden has said the work requirements for Medicaid would be a nonstarter. But he initially seemed potentially open to negotiating minor changes on food stamps, now known as the Supplemental Nutrition Assistance Program, or SNAP.

The Republican proposal would save $11 billion over 10 years by raising the maximum age for existing standards that require able-bodied adults who do not live with dependents to work or attend training programs. While current law applies those standards to recipients under the age of 50, the Republican plan would raise the age to include adults 55 and under. It would also decrease the number of exemptions that states can grant to some recipients subject to those requirements.

Biden’s position on the SNAP work requirements appeared to have hardened by Friday, when spokesman Bates said House Republicans are threatening to trigger an unprecedented recession “unless they can take food out of the mouths of hungry Americans.”

Any deal would need to be a political compromise, with support from both Democrats and Republicans to pass the divided Congress. Many of the hard-right Trump-aligned Republicans in Congress have long been skeptical of Treasury’s projections, and they are pressing McCarthy to hold out.

House Republicans have now pushed the issue to the brink, displaying risky political bravado in leaving town for the Memorial Day holiday. Lawmakers are not expected to return to work before Tuesday, at the earliest, and McCarthy has promised lawmakers he will abide by the rule to post any bill for 72 hours before voting.

Watchful House Democrats are also pressing Biden to reject any new work requirements. The top three House Democratic leaders led by Rep. Hakeem Jeffries of New York spoke late Thursday with the White House.

The Democratic-held Senate has stayed out of the negotiations, leaving the talks to Biden and McCarthy. But Senate Majority Leader Chuck Schumer of New York has pledged to move quickly to send a compromise package to Biden’s desk.

Weeks of negotiations between Republicans and the White House have failed to produce a deal in part because the Biden administration resisted for months on negotiating with McCarthy over the debt limit, arguing that the country’s full faith and credit should not be used as leverage to extract other partisan priorities.

But House Republicans united behind a plan to cut spending, narrowly passing sweeping legislation in late April that would raise the debt ceiling in exchange for the spending reductions.

“We have to spend less than we spent last year. That is the starting point,” McCarthy has insisted.

One idea is to set the topline budget numbers but then add a “snap-back” provision to enforce cuts if Congress is unable during its annual appropriations process to meet the new goals.

Lawmakers are all but certain to claw back some $30 billion in unspent COVID-19 funds now that the pandemic emergency has officially been lifted.

___

Associated Press writers Kevin Freking, Farnoush Amiri, Seung Min Kim and videojournalist Rick Gentilo contributed to this report.

WASHINGTON — President Joe Biden said a deal to resolve the government’s debt ceiling crisis seemed “very close” late Friday, even as the deadline for a potentially catastrophic default was pushed back to June 5 and seemed likely to drag negotiations between the White House and Republicans into another frustrating week.

The later “X-date,” laid out in a letter from Treasury Secretary Janet Yellen, set the risk of a devastating default four days beyond an earlier estimate. It came as Americans and the world uneasily watched the negotiating brinkmanship that could throw the U.S. economy into chaos and sap world confidence in the nation’s leadership.

Yet Biden was upbeat as he left for the Memorial Day weekend at Camp David, declaring, “It’s very close, and I’m optimistic.”

With Republicans at the Capitol talking with Biden’s team at the White House, the president said: “There’s a negotiation going on. I’m hopeful we’ll know by tonight whether we’re going to be able to have a deal.” But a deal had not come together by the time Republican House Speaker Kevin McCarthy left the Capitol late Friday.

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 and others were already making contingency plans for missed checks, with the next Social Security payments due next week.

Biden and McCarthy seemed to be narrowing on a two-year budget-slashing deal that would also extend the debt limit into 2025 past the next presidential election. After frustrating rounds of closed-door talks, a compromise had appeared to be nearing on Friday.

Republicans have made some headway in their drive for steep spending cuts that Democrats oppose. However, the sides are particularly divided 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.

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 Trump-aligned Republicans in Congress have long been skeptical of Treasury’s projections, and they are pressing McCarthy to hold out.

As talks pushed into another late night, one of the negotiators, Rep. Patrick McHenry, R-N.C., called Biden’s comments “a hopeful sign.” But he also cautioned that there’s still “sticky points” impeding a final agreement.

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.

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.

House Democrats have called such requirements for health care and food aid a nonstarter.

Asked if Republicans would relent on work requirements, Republican negotiator Rep. Garret Graves of Louisiana fumed, “Hell no, not a chance.”

House Republicans displayed risky political bravado in leaving town for the holiday. Lawmakers are tentatively not expected back at work until Tuesday, but now their return date is uncertain.

“The world is watching,” International Monetary Fund Managing Director Kristalina Georgieva said after meeting Friday with Yellen. “Let’s remember we are now in the 12th hour.”

Weeks of negotiations between Republicans and the White House have failed to produce a deal — in part because the Biden administration resisted negotiating with McCarthy over the debt limit, arguing that the country’s full faith and credit should not be used as leverage to extract other partisan priorities.

“We have to spend less than we spent last year. That is the starting point,” said McCarthy.

One idea is to set the topline budget numbers but then add a “snap-back” provision to enforce cuts if Congress is unable during its annual appropriations process to meet the new goals.

On work requirements for aid recipients, the White House is particularly resisting measures that could drive more people into poverty or take their health care, said the person familiar with the talks, who was granted anonymity to describe behind-closed-door discussions.

Over the Republican demand to rescind money for the Internal Revenue Service, it’s still an “open issue” whether the sides will compromise by allowing the funding to be pushed into other domestic programs, the person said.

In one potential development, Republicans may be easing their demand to boost defense spending beyond what Biden had proposed in his budget, instead offering to keep it at his proposed levels, according to another person familiar with the talks.

The teams are also eyeing a proposal to boost energy transmission line development from Sen. John Hickenlooper, D-Colo., to facilitate the buildout of an interregional power grid.

They are all but certain to claw back some $30 billion in unspent COVID-19 funds now that the pandemic emergency has officially been lifted.

Meanwhile, McCarthy is feeling pressure from the House’s right flank not to give in to any deal, even if it means blowing past the Treasury deadline.

McCarthy said Donald Trump, the former president who is again running for office, told him, “Make sure you get a good agreement.”

Watchful Democrats, though, are also pressing Biden. The top three House Democratic leaders, led by Rep. Hakeem Jeffries, spoke late Thursday with the White House.

McCarthy has promised lawmakers he will abide by the rule to post any bill for 72 hours before voting. The Democratic-held Senate has vowed to move quickly to send the package to Biden’s desk.

The White House has continued to argue that deficits can be reduced by ending tax breaks for wealthier households and some corporations, but McCarthy said he told the president as early as their February meeting that raising revenue from tax hikes was off the table.

While Biden has ruled out, for now, invoking the 14th Amendment to raise the debt limit on his own, Democrats in the House announced they have all signed on to a legislative “discharge” process that would force a debt ceiling vote. But they need five Republicans to break with their party and tip the majority to set the plan forward.

___

Associated Press writers Mary Clare Jalonick, Stephen Groves, Farnoush Amiri and videojournalist Rick Gentilo contributed to this report.