WASHINGTON – Speaker of the House Kevin McCarthy said negotiations with the White House over raising the US debt ceiling on Wednesday were still on hold due to disagreement over future spending, indicating the two sides were distant with just eight days before the government could face an unprecedented default.
A tangible cut in government spending in exchange for an increase in the debt ceiling is a core GOP demand, but a red line so far for the White House. The increase in the borrowing limit does not authorize new expenditure.
As the United States edged closer to default and possible economic chaos, McCarthy blamed Democrats for the heist.
“And the exit ramp here is to solve the problem of spending less than we spent last year,” he said at a press conference on Capitol Hill.
The California Republican has repeatedly touted a partisan spending bill that House Republicans passed in April without a vote from Democrats as the only option to raise the debt ceiling. “Don’t blame us Republicans when we craft a reasonable bill,” McCarthy said.
Shares fell to session low following McCarthy’s comments, as investors watched the talks closely for any signs of progress.
“I think we can make some progress today,” McCarthy said, but ignored the question of whether talks had progressed in the past 24 hours.
After a week of meeting outside McCarthy’s office, Republican negotiators headed to the White House on Wednesday, where they were expected to continue haggling at an office building adjacent to the mansion.
The talks have hit a “speed bump,” a Democratic official familiar with the situation told NBC News on Wednesday.
But outside the device, concerns grew on whether McCarthy and President Joe Biden would be able to reach an agreement to cut public spending enough to win the GOP votes needed to pass a bill that raises the debt ceiling by June 1 .
treasury secretary Janet Yellen said on Wednesday that it was already seeing “some tension in the financial markets”, driven by fears that the United States could fall into a first-ever default.
Debt ceiling stress was particularly affecting Treasury markets, Yellen said at a Wall Street Journal event. These signs of stress “should be a reminder of the importance of reaching an agreement in a timely manner”.
But after a week of daily sessions led by a group of seasoned negotiators, people on both sides say the gap between what House Republicans want and what the White House is willing to give seems wider than ever.
For example, one of the top Republican delegates, Rep. Patrick McHenry of North Carolina, on Tuesday night exposed what until then had only been implied, when a reporter asked him what concession the Democrats were getting. in the talks, to win their votes in the House.
“The debt ceiling,” he said.
“That’s what they’re getting,” added Rep. Garret Graves of Louisiana, another GOP negotiator.
This view of last week as one where Democrats are forced to agree to Republican demands, while Republicans in return only offer the chance to avoid a catastrophic default, would anger Democrats and reduce the odds. of an agreement. The GOP has pushed for spending cuts as part of any deal to raise the debt ceiling, which alone does not authorize new spending.
A default would wreak havoc on the US economy and force millions of people to at least temporarily lose the government benefits that many rely on to survive.
With talks at an apparent breaking point for the second time in a week, and a deal likely within the next 24 hours – in time for the House to turn a deal into a bill and vote in favor before the weekend – seems very slim McCarthy seemed open to letting House members leave DC for Memorial Day weekend without a deal.
“I haven’t made that decision yet,” he told reporters on Tuesday, but added: “I should have, depending on where we are at the time, brought them back to home and come back.”
With Republicans only seeming to harden their stance over time, Democrats on Wednesday accused McCarthy of bowing to pressure from the far-right in his caucus. They said he gave in to members who had made a long list of demands but were unlikely to vote for a debt ceiling hike no matter what it contained.
One such laundry list was released Wednesday by Rep. Chip Roy, R-Texas, a member of the ultraconservative House Freedom Caucus. Presented as A memothe list contained seven provisions that appeared in the debt limitation bill that House Republicans passed this spring, but which died upon arrival in the Democratic-controlled Senate.
“The following reforms were part of the Limit, Save, Grow Act – each is essential and none should be abandoned just in pursuit of a ‘deal,'” Roy’s memo reads.
Pressure like this from extremists within his own party has made McCarthy’s path to passing a bill that much more treacherous because it will need Democratic votes.
Biden has offered compromises, the Democratic official told NBC News, including freezing spending, writing off unspent COVID funds and putting in place a two-year cap on spending.
But McCarthy rejected those concessions.
“Let me be very clear, we’re not putting anything on the floor that doesn’t spend less than what we’ve spent this year,” he said Tuesday.
This is a developing story, please check for updates.