White House officials and Republican lawmakers Thursday were close to agreeing on a deal that would raise the debt ceiling for two years while imposing strict limits on discretionary spending not related to the military or veterans during the same period. Officials scrambled to seal the deal in time to avoid a potential federal default in just over a week.
If the deal takes shape, Republicans will be able to claim that they are cutting some federal spending even as spending on military and veterans programs continues to grow, and Democrats will be able to cut back on most domestic programs. will be able to claim that they have escaped significant reductions.
Negotiators from both sides had been talking until the evening and began drafting the bill, but some details were still in flux.
“We’ve been talking to the White House all day and it’s been back and forth, and it’s not easy,” Speaker Kevin McCarthy told reporters as he left the Capitol on Thursday night, describing the debate. did not disclose. “It will take time, but we are working hard to make it happen.”
The compromise, if agreed and enacted, would increase the government’s borrowing limit for two years after the 2024 election, according to three people familiar with the plan, who asked not to be identified because the plan is still being worked out. become.
The US hit the legal cap (currently $31.4 trillion) in January and has since relied on accounting measures to avoid default. The Treasury Department expects to run out of ability to pay bills on time as early as June 1.
The deal, which would meet Republican demands to cut some federal spending in exchange for removing the debt ceiling, would be unpopular with a large portion of the majority of voters who support it, with the help of fiscal tactics. It will politically cover agreements that are likely to become
It would impose a two-year cap on discretionary spending, but that cap would apply differently to non-defence discretionary spending and military spending. Military spending will increase next year, as will spending on some veteran care, which falls under discretionary non-defense spending. The rest of non-defense discretionary spending will decline slightly or remain broadly flat compared to this year’s levels.
The deal would also cut $10 billion of the $80 billion Congress approved last year for the IRS’ crackdown on high-income earners and tax evaders, a provision that was still under debate. Democrats support the initiative, and bipartisan scorekeepers say the money will help the government pay more in taxes and reduce the budget deficit. However, Republicans condemned this, falsely claiming that the money would be used to finance an army of auditors to pursue workers.
White House Press Secretary Michael Kikukawa said in an email on Thursday, “The president and negotiating team are committed to providing better customer service to taxpayers, including funding the IRS to crack down on tax fraud among the wealthy. We are fighting hard for our agenda,” he said. He answered questions about the clause.
Thursday’s deal essentially shifts IRS funding to discretionary spending outside of defense, allowing Democrats to avoid further cuts to programs like education and environmental protection, according to people familiar with the pending deal. Become.
The plan had not yet been finalized, and negotiators continued to negotiate the key details that could make or break the deal.
“Nothing will be done until we actually have a full deal,” said Rep. Patrick T. McHenry of North Carolina, one of the Republican’s key negotiators, although he also gave details of the negotiations. did not mention. “Nothing has been resolved.”
The cuts included in the package were almost certainly too modest to win votes from hardline fiscal conservatives in the House. Liberal groups had already voiced their displeasure on Thursday over a deal reportedly cutting back the IRS funding.
But negotiators agreed to fund military and veterans programs at levels that President Biden envisions in next year’s budget, according to people familiar with the progress of the deal. They would cut non-defense discretionary spending below this year’s levels, but much of the cuts would be covered by changes in IRS funding and other budgetary measures. White House officials argue that these changes will keep non-defense discretionary spending virtually the same next year.
After that, all discretionary spending will increase by 1% in 2025, after which the cap will be lifted.
McCarthy on Thursday nodded to the idea that a compromise to avoid a default would likely invite critics from both parties.
“I don’t think everyone will be happy at the end of the day,” he said. “That’s not how this system works.”
Another provision of the deal seeks to avoid a government shutdown before the end of the year, robbing Republicans of their ability to seek drastic cuts to government programs and agencies through the annual appropriations process.
The exact details of how such measures would work remained unclear as of Thursday night. But this was based on a kind of penalty that would adjust spending caps if Congress failed to pass all 12 separate spending bills that fund the government by the end of the year.
Negotiators remained at odds over working requirements for the social safety net program and permission to review domestic energy and gas projects.
“We still have legislative and policy work to do,” McHenry said. “All those details really lead us to being able to solve this problem.”
Far-right Republican lawmakers on Thursday grew increasingly worried that Mr McCarthy would sign a compromise deal deemed unconservative as negotiators nibbled closer to a deal. Right-wing Republican lawmakers have already vowed to oppose any compromise that would roll back cuts that were part of the debt-saving bill.
Influential conservative Texas Rep. Chip Roy tweeted on Thursday morning, shortly after he told a local radio station, “Republicans shouldn’t be making bad deals.” wrote to Because he didn’t like “the direction they were going.”
South Carolina Republican Rep. Ralph Norman said he would reserve judgment on whether to vote for the compromise until he saw the bill, but added, “What I’ve just seen is not good.”
Former President Donald J. Trump echoes that, saying Republicans should force a default if negotiations don’t get the results they want. McCarthy told reporters that he briefly spoke with Trump about the negotiations. It just came to me for a second,” said the speaker. “He said, ‘Make sure you get a good deal.'”
After teeing off at his golf course outside Washington, Trump approached a New York Times reporter with an iPhone and showed him the call with McCarthy.
Mr Trump described his call as “a quick, quick conversation” and said it would be “interesting, but it won’t be easy.”
“They have been wasting money on nonsense for three years,” he added.
Luke Broadwater and Stephanie Lai Contributed to reporting from Washington. Alan Blinder Contributed to a report from Sterling, Virginia.
