Joe Biden and Republican lawmakers on Thursday appeared to be nearing a deal to cut spending and raise the debt ceiling, with little time to spare to avoid a potential default that could wreak havoc on the economy and global markets.
The deal under consideration by negotiators would raise the government’s $31.4tn debt ceiling for two years while capping spending on most items, a US official told Reuters. It would also increase funding for discretionary spending on military and veterans while essentially holding non-defense discretionary spending at current year levels, the official said.
The agreement would specify the total amount the government could spend on discretionary programs including housing and education, according to a person familiar with the talks. The two sides, who met virtually on Thursday, are just $70bn apart on a total figure that would be well over $1tn, according to another source.
Republican negotiators have backed off plans to increase military spending while cutting non-defense spending and instead backed a White House push to treat both budget items more equally. Conversations are set to continue into the night.
Kevin McCarthy, the Republican House speaker, told reporters Thursday evening the two sides have not reached a deal. “We knew this would not be easy,” he said.
The US House adjourned on Thursday for the Memorial Day holiday weekend, but lawmakers have been told to be ready to come back to vote if a deal is reached.
Lawmakers left Washington for their home districts as advisers to McCarthy, and members of the Biden administration continued to haggle over the details.
“Speaker McCarthy and I have had several productive conversations, and our staffs continue to meet – as we speak, as a matter of fact – and they’re making progress,” Biden said on Thursday at the White House. “There will be no default, and it’s time for Congress to act now.”
Emphasizing that default was not an option, Biden said the negotiations have focused on creating the outlines of a budget that can win bipartisan support, as the president and McCarthy have clashed over their “competing visions for America”.
“Speaker McCarthy and I have a very different view of who should bear the burden of additional efforts to get our fiscal house in order,” Biden said. “I don’t believe the whole burden should fall on the backs of middle-class and working-class Americans. My House Republican friends disagree.”
With just one week left before the potential default deadline of 1 June, negotiators plan to continue their efforts to reach an agreement over the holiday weekend. Speaking to reporters on Capitol Hill on Thursday, McCarthy said the previous day’s talks continued well past midnight, and negotiators were meeting around the clock until a deal is reached.
“I thought we made some progress,” McCarthy said. “There’s still some outstanding issues, and I’ve directed our teams to work 24/7.”
Congressman Patrick McHenry of North Carolina, one of the chief Republican negotiators in the talks, said he did not expect a deal to be announced on Thursday.
“Everything’s sensitive at this moment,” McHenry told reporters. “There’s a balance that has to be struck, and there’s a lot more work that has to be done. But the work that we’re doing centers in on a shorter and shorter array of issues.”
