House Speaker Kevin McCarthy and President Biden said debt limit talks Monday night were “productive” but failed to deliver a deal, as both sides raced to agree on cutting spending and raising the nation’s borrowing limit against a default deadline nine days away.
Mr. McCarthy emerged from the hourlong talks at the White House to say negotiators for House Republicans and the administration would “work through the night.”
“They’re going to come back together,” said Mr. McCarthy, California Republican. “The president and I know the deadline. I think the president and I are going to talk every day until we get this done.”
Although both sides want an agreement, Mr. McCarthy said, “There’s nothing agreed to. Everything’s being talked about.”
The president said both sides “reiterated once again that default is off the table and the only way to move forward is in good faith toward a bipartisan agreement.” Mr. Biden said in a statement that negotiators will keep talking about “areas of disagreement.”
Treasury Secretary Janet Yellen has said the federal government might be unable to pay all its bills if Congress does not raise the $31.4 trillion debt ceiling by June 1. Mr. McCarthy is ruling out a short-term extension.
“If it’s a short-term extension, I think the country looks at it like somehow we failed, that we can’t do the job we’re supposed to do,” he said.
House Financial Services Committee Chairman Patrick McHenry, North Carolina Republican, is one of the negotiators. He said the areas of disagreement remain “sticky.”
“The middle ground here is something that’s not acceptable to either party,” he told reporters at the White House.
Despite the urgency, the Senate is on recess and will not return until after Memorial Day. Although Senate Democrats could cut their break short, legislation takes nearly a week to move through the chamber.
House rules also specify that legislation needs to be public for at least 72 hours before it can be brought up for a vote. Mr. McCarthy said he was unwilling to waive the rule, which was a demand of conservative hard-liners in exchange for elevating him to the speakership this year.
“I’m not going to be afraid of what the agreement comes out to in the end,” said Mr. McCarthy. “I would give everybody 72 hours so everybody knows what they’re voting for.”
The White House meeting was the first in-person session between the speaker and the president since Mr. Biden left Washington last week for a meeting with other G7 leaders in Japan. During Mr. Biden’s absence, talks between administration staff and House Republicans broke down several times over proposed spending cuts.
Mr. McCarthy said the breakdown is partly because of the White House’s unwillingness to cut spending immediately. Republicans are pushing for at least $130 billion in the upcoming budget. At least half could come from rescinding unspent pandemic aid.
“The president’s budget wants to spend more money than we spent at the height of COVID,” said Mr. McCarthy. “We shouldn’t do that.”
The White House proposes keeping domestic and defense spending flat for the upcoming fiscal year. They argue that would amount to a spending cut because of inflation.
Negotiators are floating the prospect of a compromise that adjusts last year’s government spending levels for inflation and then capping spending growth at 1% for the next two years.
“We have to be in a position where we can sell it to our constituency,” said Mr. Biden. “We have a pretty well-divided House, almost down the middle, and it’s not any different in the Senate.”
House Republicans are pushing for immediate cuts in the upcoming budget and at least 10 years of spending caps. They have specified the spending cuts will have to come from domestic spending. Republican lawmakers want to boost funding for defense, border security and veterans benefits.
Mr. Biden proposes raising taxes on the wealthy by closing tax loopholes rather than slashing spending on domestic programs.
“We’ve agreed we need to reduce the deficit … and we need to cut spending,” said Mr. Biden. “I think we should be looking at tax loopholes and making sure the wealthy pay their fair share. I think revenue matters as long as you’re not taxing anybody [making] under $400,000.”
Republicans say tax hikes are a non-starter, especially given inflation and other economic uncertainties.
“We’re already in a challenge where they raised so much inflation, based upon their spending. That would be a stupid thing to do,” Mr. McCarthy said.
Outside of spending cuts are divisions over expanding welfare work requirements.
House Republicans want to impose requirements that able-bodied and childless recipients of Medicaid, food stamps and cash assistance work at least 20 hours per week. They are also proposing restrictions on the ability of states and the federal government to waive work requirements for food stamps.
Although Mr. Biden has opened the door to expanding work requirements on recipients of direct cash payments through the Temporary Assistance for Needy Families program, the savings would be minuscule. The Congressional Budget Office estimates that expanded work requirements on TANF recipients would save only $6 million through 2033.
Even that is too much for some Democrats. The nearly 50-member Congressional Black Caucus is threatening to vote against any work requirements on welfare.
“The Congressional Black Caucus has no intention of allowing families to go hungry to appease Republicans,” said Rep. Steven Horsford, Nevada Democrat. “It’s a recipe for expanding racial and gender disparities, which seems to be their modus operandi.”
Backing up the CBC’s opposition to new work requirements is the more than-90 member Congressional Progressive Caucus. Rep. Pramila Jayapal, Washington Democrat and chairwoman of the liberal caucus, has repeatedly stressed that imposing work requirements is a “non-starter.”
Like the president, Mr. McCarthy faces pressure from his right flank to not compromise.
The more than 40-member House Freedom Caucus, which nearly tanked Mr. McCarthy’s speakership bid this year, has called for a suspension of negotiations. Rather than negotiate, the conservative group said, Mr. McCarthy should push for the wholesale adoption of the debt limit legislation that House Republicans passed last month.
“This legislation is the official position of the House Freedom Caucus and, by its passage with 217 votes, the entire House Republican Conference,” the group said in a statement. “There should be no further discussion until the Senate passes the legislation.”
The Republican bill would cut spending by $4.8 trillion while capping spending growth at 1% over the next decade. Apart from expanding work requirements, it would cancel Mr. Biden’s student loan forgiveness program and more than $200 billion in green energy tax credits.
• Haris Alic can be reached at firstname.lastname@example.org.
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