WASHINGTON (AP) — House Republicans are pushing debt ceiling talks to the curb, displaying risky political bravado as they prepare to leave town Thursday for the holiday weekend just days before the U.S. could face an unprecedented default that could throw the global economy into chaos.
A defiant House spokesman, Kevin McCarthy, said the debt ceiling standoff “wasn’t my fault” as Republican negotiators and the White House failed to finish talks. He warned that they need more time to try to reach a deal on budget cuts with President Joe Biden.
But it’s clear that the Republican speaker, who leads a party aligned with Trump, whose right wing brought him to power, is now staring at a potential crisis.
Lawmakers are not expected to return to work until Tuesday, just two days from June 1, when Treasury Secretary Janet Yellen has said the US could start to run out of cash to pay their bills and face a potentially catastrophic default.
Fitch Ratings placed the U.S.’s AAA credit at “ratings observed negative,” warning of a possible downgrade due to what it called arbitrage and political partisanship around the uprising debate of the debt ceiling.
“This is a battle between extremism and common sense,” said Democratic Rep. Katherine Clark of Massachusetts, the minority whip.
Republicans, he said, “want the American people to make an impossible choice: devastating cuts or a devastating debt default.”
Weeks of negotiations between Republicans and the White House have failed to produce a deal, in part because the Biden administration never expected to have to negotiate with McCarthy on the debt limit, arguing that it should not be used as leverage to extract other partisan priorities.
McCarthy is resisting the sharp spending cuts that Republicans are demanding in exchange for his vote to raise the nation’s debt limit. The White House has offered to freeze next year’s 2024 spending at current levels, but the Republican leader says that’s not enough.
“We have to spend less than we spent last year. That’s the starting point,” said McCarthy, R-Calif.
Failure to raise the nation’s debt ceiling, now at $31 trillion, would risk a potentially chaotic federal default that would almost certainly cause economic turmoil at home and abroad. Anxious retirees and social service groups are among those already making contingency plans.
Even if negotiators reach a deal in the coming days, McCarthy has promised lawmakers he will abide by the rule to release any bill for 72 hours before voting, now likely Tuesday or even Wednesday. The Senate, where Democratic Majority Leader Chuck Schumer has vowed to move quickly, would also have to pass the package before it can go to Biden’s desk to be signed into law, just before possible deadline next Thursday.
The outlines of a deal have been out there for days, but Republicans are not satisfied as they press the White House team for more.
In one possible development, Republicans may be scaling back their demand for increased defense spending, rather than offering to hold it at the levels proposed by the Biden administration, according to a person familiar with the talks, who granted the anonymity to discuss them.
Republicans can achieve their goal of rolling back beefed-up funding for the Internal Revenue Service if they instead agree to the White House funneling that money into other domestic accounts, the person said.
At the White House, press secretary Karine Jean-Pierre accused Republicans of risking a devastating default that would affect “every part of the country” as they call for “extreme” spending cuts that would hurt millions of North – Americans
He denounced what the administration called a “manufactured crisis” set in motion by the GOP.
The White House has continued to argue that deficits can be reduced by ending tax breaks for the wealthiest households and some corporations, but McCarthy said he told the president as early as his February meeting that raising revenue for tax increases were off the table.
Donald Trump, the former president who is running for office again, has encouraged Republicans to “fault” if they don’t get the deal they want from the White House.
Time is short to reach an agreement. Yellen said Wednesday that it “seems almost certain” that without a deal the U.S. will not make it through early June without a default. “We’re already seeing some stress in the Treasury markets,” he said at a Wall Street Journal event.
Although Biden has ruled out, for now, invoking the 14th Amendment to raise the debt limit on his own, House Democrats announced that they have all signed on to a legislative “discharge” process that would force a vote on debt ceiling But they need five Republicans to break with their party and sway the majority to move the plan forward.
“Sign the bill!” Democrats called out in the House after Republican Majority Leader Steve Scalise of Louisiana announced the holiday schedule.
Agreement on a higher level of spending is vital. It would allow McCarthy to offer spending restrictions to conservatives without being so severe that he would drive away the Democratic votes that would be needed in a divided Congress to pass any bill.
But what, if anything, Democrats would gain if they accepted deeper spending cuts than the Biden team has proposed is uncertain.
McCarthy and his Republican negotiators said what Democrats are getting is an increase in the debt ceiling, something both parties typically take responsibility for doing.
“The problem is not the White House. The problem is Kevin McCarthy and the extreme Republicans,” said Rep. Pramila Jayapal, D-Washington, chairwoman of the progressive caucus. “They are the ones who are holding this economy hostage, the ones who are making all these cuts to the American people.”
Negotiators are now also debating the length of a 1 percent cap on annual spending growth going forward, with Republicans scaling back their demand for a 10-year cap to six years, but the White House is offering just one year, for 2025.
Republicans want to strengthen work requirements for government aid to recipients of food stamps, cash assistance and the Medicaid health care program that the Biden administration says would affect millions of people who depend on the assistance
All parties have looked at the possibility that the package would include a framework to ease federal regulations and speed up the development of energy projects. They are sure to recover about $30 billion in unspent COVID-19 funds now that the pandemic emergency has officially been lifted.
The White House has countered by proposing to keep defense and non-defense spending next year, which would save $90 billion in budget year 2024 and $1 trillion over 10 years.
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Associated Press writers Seung Min Kim, Fatima Hussein, Kevin Freking and Darlene Superville contributed to this report.
