Negotiators edge closer to debt ceiling deal as Yellen extends deadline to June 5 | american politics

Democratic and Republican negotiators struggled Friday to reach an agreement to raise the US government debt ceiling to $31.4 billion, as a key Republican cited disagreements over work requirements for some benefit programs for low-income Americans.

On Friday, Treasury Secretary Janet Yellen said the United States would run out of money to pay its bills by June 5, a slight extension of her June 1 prediction.

The talks were reportedly close to conclusion, with lawmakers seeking to avoid a disastrous and unprecedented default. Wall Street and European stocks rose as the White House and congressional Republicans worked on the finishing touches to a package to present to Congress.

Negotiators appeared close to reaching a deal to lift the two-year limit and cap spending, with an agreement on funding the Internal Revenue Service (IRS) and the military, Reuters said quoting a US official . But a White House official told the same outlet that the talks could easily slip into the weekend.

The lawmakers were called in after leaving Washington for the Memorial Day vacation.

“We’ve made progress,” top Republican negotiator Garret Graves told reporters. “I said two days ago we’ve made progress on some key issues, but I want to be clear, we continue to have major issues that we haven’t closed the gap on, including requirements of work.”

Republican House Speaker Kevin McCarthy told reporters on Capitol Hill, “We know this is the critical moment. We’re not just trying to get a deal, we’re trying to get something that’s worthy of the American people, that changes the trajectory.”

Democrats have signaled Joe Biden is open to considering spending cuts, including planned additional funding for the IRS, a target of right-wing attacks, The Washington Post reported. Citing an unnamed official, Reuters said the deal would raise the cap for two years “while capping spending on everything except military and veterans.”

On Thursday evening, North Carolina Congressman Patrick McHenry, a Republican negotiator, said: “I think both teams understand that we still have serious issues to work out and resolve, and that’s going to take some time. . . That’s all we can say.”

Any deal would need to be passed by the House and Senate, which usually takes days.

Yellen has been warning for months that not raising the debt ceiling would be a “catastrophe”. In a letter to Congress released on Friday, she said the federal government was expected to make more than $130 billion in payments in the first days of June, including payments to veterans and Social Security and National Security recipients. health insurance, and leave the Treasury with “extremely weak resources”.

Raising the debt ceiling is usually a formality, if subject to political grandstanding. Republicans have raised the ceiling without preconditions three times under Donald Trump, while adding to the debt with tax cuts and spending increases.

But McCarthy only has a five-seat majority and is beholden to his party’s far right, which is demanding severe cuts.

On Thursday, White House press secretary Karine Jean-Pierre told reporters, “We are fighting the Republicans’ extreme and devastating proposal that would cut… law enforcement, education, food aid, all of these things are essential for American families who are just trying to make ends meet.”

Most analysts say a default would plunge the global economy into market chaos and likely recession. This week, the US Treasury’s cash balance fell to $49.5 billion, prompting Bloomberg TV to report: “There are 24 people on the Bloomberg Billionaires list who have more money than the Treasury currently has.”

Reuters spoke to David Beers, former head of sovereign ratings at Standard & Poor’s, who reacted in 2011 to a similar Republican-fueled standoff by lowering his U.S. credit rating, a move that fueled market instability. .

“We thought the political polarization in the country was likely to last, and secondly, we were also concerned about the rising debt trajectory,” Beers said. “On both counts, our expectations, if anything… were exceeded. I have no doubt in my mind that it was the right choice.

Now some on the Republican right, including Trump, the former president and current presidential frontrunner, say the party should let the United States default if Biden refuses to back down.

Deputy Treasury Secretary Wally Adeyemo told CNN the government does not have the ability to “sort” payments if the debt ceiling is not raised. Adeyamo also said invoking the 14th Amendment – which states that the public debt “shall not be called into question” – would not solve the problem.

Adeyemo said, “I’m not convinced that we have the ability to do some type of prioritization that will mean all seniors, all veterans, all Americans will be paid.”

Some House Democrats are upset about being left out of the negotiations and the way Biden sent advisers rather than systematically involving himself. Democrats also lamented how Republicans appear to be winning the message war, with public polls showing support for spending cuts — and an increase in the cap.

Connecticut’s Rosa DeLauro told Politico: “The scale of the cuts [demanded by Republicans] is staggering, which the public really knows very little about. The president should be there.

Biden was scheduled to meet the winning basketball teams at the White House on Friday, then travel to the presidential retreat at Camp David in Maryland.

Steven Horsford of Nevada, chairman of the Congressional Black Caucus, said, “They need to use the power of the presidency…I need the American people to know that the Democrats are here fighting, working, ready to achieve. to a deal to avoid a default and only the White House, the President, can explain that right now.

Biden has not remained silent. At the White House on Thursday, he said Republicans wanted “huge cuts” that would hurt ordinary Americans.

“Now is the time for Congress to act,” he said, adding, “Under my administration, we have already reduced the deficit by $1.7 billion in our first three years. But President McCarthy and I have a very different view of who should bear the burden of the extra effort to get our finances in order.

“I don’t believe that the entire burden should fall on the backs of middle-class and working-class Americans. My House Republican friends disagree.