Politico

As details leak about an emerging bipartisan debt deal just days before a possible default, House conservatives are growing increasingly unhappy.

With House GOP leadership revealing few policy specifics as talks continue, their lawmakers have sought information elsewhere. In this case, some GOP members are consulting a list — said to detail exactly where the negotiators have found common ground — that Rep. Tim Burchett shared with colleagues on the floor Thursday. The Tennessean, one of four Republicans to oppose the House GOP’s debt ceiling plan, declined to tell reporters where the list originated, but a Republican familiar with the matter said it came from leadership.

Among the details, according to that Republican: An agreement to lift the debt limit through 2024, a procedure in place to incentivize Congress to pass all 12 spending bills and a plan to claw back unspent Covid money. The two sides are also still working out the GOP’s demands for work requirements for certain safety net programs.

An aide to Speaker Kevin McCarthy did not respond to a request for comment on the list. When asked how many members saw the list, Burchett smiled and told reporters: “Next question.”

One of the concerned lawmakers was Rep. Ralph Norman (R-S.C.), a member of the conservative Freedom Caucus who has repeatedly stated he didn’t want anything less than what the House GOP passed as their debt plan last month.

McCarthy “doesn’t have the 218 on that unless he gets Democrats,” Norman said of the emerging proposal, noting he saw the list from Burchett. “If he gets Democrats, that’s a telltale sign.”

Rep. Bob Good (R-Va.) echoed Norman, citing concerns about “rumors” of a potential deal that would raise the debt ceiling for more money and more time than Republicans wanted — and “for a whole lot less in return that we need.”

“If that were true, that would absolutely collapse the Republican majority for this debt-ceiling increase,” he said.

The rising conservative angst over what could resemble a final deal is a preview of the intense whipping operation that GOP leaders will need to begin once they’ve locked down an agreement. While conservatives were always unlikely to support an agreement with Democrats, it’s a glimpse at the fury that could erupt on McCarthy’s right flank over a Biden-approved deal — and that anger could have lingering implications for the Californian’s speakership long after the debt crisis is defused.

Rep. Byron Donalds (R-Fla.), citing “some of the things that are being thrown around,” said he doesn’t see the point in discussing Congress passing 12 appropriations bills if “the spending is frankly too high.”

“I think if the speaker negotiates that with the President, the speaker will find out there’s a lot of Republicans who won’t be agreeing with the speaker,” he said.

Adding to the pressure they are beginning to apply, the House Freedom Caucus on Thursday publicly released a letter members sent to McCarthy, where they argued the current unity of the House GOP hinges on how he chooses to move forward: “As you navigate the debt limit debate, you are the steward of this [GOP] unity and will determine whether it continues to strengthen and places a historic stamp on this Congress or evaporates,” the Trump-aligned group wrote.

Conservative lawmakers argued for three “specific actions.” They wanted McCarthy pushing to include in any debt deal “additional provisions” to what was passed in the House GOP bill, called for the party to demand Treasury Secretary Janet Yellen share how she arrived at June 1 as the earliest date of a potential default and argued Republicans should pass a short-term agreement with limited cuts that would extend the debt ceiling through June.

When asked how many members saw the list, Burchett smiled and told reporters: “Next question.”

For some rank-and-file Republicans, it’s no surprise their Freedom Caucus colleagues are threatening to jump ship as negotiations ensue. Those members argue it’s unrealistic to expect McCarthy not to deviate from the bill they passed; compromise logically requires some concessions.

Even if they won’t clearly state how they would vote, members like Norman and Good have said for weeks that they wouldn’t consider anything less than the House bill. The Freedom Caucus had released a different statement last week, calling for McCarthy to call off talks with President Joe Biden entirely, arguing it left the Senate no choice but to take up the House bill.

Since then, signs of disquiet among conservatives have continued to grow. Earlier this week, Rep. Chip Roy (R-Texas) argued in a closed-door conference meeting that the deal should be more about saving the country from reckless spending than getting an agreement. By Thursday, Roy — who had helped steer the House GOP’s debt plan to passage — signaled on a radio show that he would oppose any deal that resembled what he was hearing so far.

“That doesn’t sound like a deal that I can support,” Roy said on the emerging details, adding that his understanding was the deal being discussed only included “modest reduction” of the current year’s spending levels.

Asked by POLITICO about Roy’s concerns over debt talk direction, McCarthy replied: “I just think [members] just need to be updated.”

Similarly, House Financial Services Chair Patrick McHenry (R-N.C.) — one of the GOP negotiators — downplayed the veracity of leaks coming from the ongoing talks.

“Parts of the deal are rumors,” he said Thursday morning. “And that’s what happens with all these legislative negotiations because you have very few over in the White House, you have very many here, and many of you [reporters] here so everybody’s trying to get a little nuance of the story. But nothing’s done until you actually have a complete deal.”

Jordain Carney contributed to this report.

With seven days until the earliest possible federal default, a debt deal appears to be getting closer: Multiple people close to the talks told POLITICO that Republicans and the White House are closing the gap on spending levels — a critical part of negotiations.

Republicans are eager to show real progress before members hit the road on Thursday for Memorial Day weekend, even if negotiators remain short of a deal. Despite the movement, one person briefed on the negotiations the two sides are still tens of billions of dollars apart.

“I think we’ve made some progress working down there. So that’s very positive … and we’ll continue to work through to try to get a solution,” Speaker Kevin McCarthy (R-Calif.) told reporters late Thursday afternoon. Earlier in the day, Thursday he said, “Things are better than they were yesterday.”

“It seems to me that if there’s a resolution that involves a spending freeze that the spending freeze should also match the length of time the debt ceiling is suspended,” Minority Leader Hakeem Jeffries (D-N.Y.) told reporters Wednesday.

In another development, an energy transmission bill from Sen. John Hickenlooper (D-Colo.) called the BIG Wires Act is under serious consideration for a final package, according to the person briefed, who spoke on the condition of anonymity to candidly describe the private talks.

Together, that signals major progress on two of “four pillars” for a deal laid out recently by Rep. Garret Graves (R-La.): spending caps and energy permitting.

Another of Graves’ pillars, tightened work requirements for food aid recipients, is a trouble spot that is slowing discussions. The White House and Republicans anticipate finding some common ground on the fourth — clawing back unspent Covid aid dollars — but they aren’t getting specific yet.

To be clear: No one is working on the full, final legislative text right now. At this point, there is only speculation about how it could all unfold if a deal comes together.

Here’s how the next several days are expected to play out:

After Thursday morning’s votes, the House will recess for the (extra) long weekend. Leadership has promised that members will get 24 hours notice before they need to be back in Washington for votes. (Expect that to coincide with the 72-hour period for reviewing the legislation that McCarthy has promised.)

A Monday vote is most likely off the table. But some Republican aides are floating the possibility of a Tuesday night vote if they can get text in time. They would wait until after markets close to avoid any floor drama sending markets into a tizzy.

More on negotiation details and potential scheduling are expected once members are gone for the weekend. By waiting for their colleagues to clear out, leaders and negotiators hope to avoid fighting words from the rank-and-file going viral and tanking the ongoing talks.

One worrisome note that could help propel the final talks: One credit rating agency is considering downgrading the nation’s top credit rating as the country staggers towards default and negotiations between the White House and Republicans continue. Fitch has put the U.S. triple-A credit rating on “rating watch negative.”

“The brinkmanship over the debt ceiling, failure of the U.S. authorities to meaningfully tackle medium-term fiscal challenges that will lead to rising budget deficits and a growing debt burden signal downside risks to U.S. creditworthiness,” Fitch said.

President Joe Biden and House Speaker Kevin McCarthy are facing an upcoming deadline known as the X-date as the two continue their standoff on whether to increase the federal debt ceiling.

The X-date, the day the U.S. government says it can no longer fulfill all its financial obligations, is rapidly approaching, according to Treasury Secretary Janet Yellen, along with Wall Street economists and a top Washington think tank. Others say the X-date could occur anywhere from June to early August.

Here’s a breakdown of when experts believe the U.S. could default on its debt:

Janet Yellen predicts June 1

Yellen renewed her warning to congressional leaders on Monday that the U.S. risks running out of borrowing power in as little as 10 days.

Yellen contends that “it is highly likely” the Treasury Department won’t be able to pay all the bills in early June, potentially “as soon as June 1.”

“I indicated in my last letter to Congress that we expect to be unable to pay all of our bills in early June and possibly as soon as June 1. And I will continue to update Congress, but I certainly haven’t changed my assessment. So I think that that’s a hard deadline,” she said.

Moody’s Analytics predicts avoiding default

Moody’s is confident that Biden and McCarthy can avoid a default.

June 15 is the date when interest payments on U.S. debt are scheduled to be made. Analysts believe that the Treasury Department would do everything it could to have enough cash to make those payments to avoid a default.

William Foster, a senior vice president and senior credit officer at Moody’s, told POLITICO’s Morning Money that his team expects policymakers to reach an agreement before June 1 — which would spare Treasury from having to prioritize payments on government debt.

“If we got past the X-date where we’re in a period where there was prioritization of payments — and interest was continuing to be paid, but other payments were missed — we would have to reassess at that point,” Foster said.

Moody’s said that as long as the U.S. pays interest and principal on bonds, it won’t be in default even if it misses other payments like Social Security and military pay — notwithstanding the political peril.

Goldman Sachs predicts June 8 or 9

Goldman Sachs’ chief political economist told Bloomberg that the U.S. could default on its debt on June 8 or 9.

X-date forecasts could vary because it depends on the amount of taxes and other revenue the U.S. government collects compared to how much it spends.

“The reality is that Congress has to do this at some point very soon, and they should just go ahead and do it,” Goldman Sachs Research Chief Political Economist Alec Phillips told Bloomberg. “So waiting for the last minute isn’t necessarily the right move, even though we think that maybe they could go a little bit longer.”

Bipartisan Policy Center predicts early June to August

The Bipartisan Policy Center estimates a wider gap for when the X-date could occur, predicting that it could most likely happen between early June and early August.

If the Treasury Department can make it to the middle of June, the department would unlock a stream of cash that would keep the country from defaulting on its debt through June or even August, according to an analysis the center released Tuesday. But it’s unclear if the Treasury Department can make it to June 15.

“BPC projects that if policymakers do not act on the debt limit, Treasury will most likely have insufficient cash to meet all its financial obligations sometime between early June and early August 2023, with an elevated risk between June 2 and June 13,” the center states.

President Joe Biden and Speaker Kevin McCarthy ended their one-on-one meeting Monday still short of a deal to avoid a U.S. debt default that could come as soon as June 1.

Yet McCarthy described the tone of the meeting “better than any other” discussion, adding that he believed the two sides would ultimately strike an agreement.

House GOP leaders have said they must reach a bipartisan fiscal deal this week so that Congress has enough time to pass the measure and send it to Biden’s desk to avoid a potentially market-crashing debt breach.

Speaker Kevin McCarthy said Monday he remains confident that Congress could still beat a possible June 1 default deadline despite the weekend stall in talks with the White House.

While McCarthy said he would’ve preferred a deal by Sunday night, he declared the U.S. could still avoid an economically destructive debt default by June 1 if House negotiators can strike — and pass — a deal this week.

“We should’ve gotten it done by the weekend. It does make it more difficult but I think we can still make that all happen,” McCarthy told reporters in the Capitol, hours before his scheduled Monday meeting with President Joe Biden.

The two last met in person on May 16, before Biden’s trip to the G-7 summit in Japan.

“We could get a deal tonight, we could get a deal tomorrow” or sometime this week, McCarthy added, and it would be “still possible” to avert potential doomsday on June 1.

McCarthy spoke to reporters Monday afternoon, shortly after the second meeting in two days between GOP negotiators and White House officials.

Reps. Garret Graves (R-La.) and Patrick McHenry (R-N.C.), the speaker’s emissaries in the talks, have said little publicly about what progress has been made in the last 24 hours. The Democratic negotiators — close Biden adviser Steve Ricchetti, White House budget chief Shalanda Young and congressional liaison Louisa Terrell — have also remained mum.

Several Democrats, though, have privately described the talks as taking a turn for the worse over the weekend.

One White House official said Monday that McCarthy’s negotiators took an increasingly hard line in talks at the end of last week and into the weekend, including an insistence on new restrictions for the federal nutrition assistance program known as SNAP that hadn’t been included in the GOP’s House-passed bill.

And the White House spent the first half of the day blasting out a series of articles highlighting the disastrous impact a default would have on small businesses, veterans and major health programs.

As of Monday, however, McCarthy characterized the talks as “professional” and “productive” — even as he acknowledged the wide gaps that still exist. Republicans have demanded steep cuts to domestic spending, as well as new requirements like work requirements for social programs, which the speaker said remained a priority.

“Nothing’s agreed to,” McCarthy said, adding: “The discussions today are understanding both sides.”

Adam Cancryn contributed to this report.

CORRECTION: A previous version of this report misspelled Rep. Garret Graves’ name.

The nation stands on the precipice of an unprecedented financial calamity, testing whether the president’s theory of governance can continue to work.

President Joe Biden has prioritized deal-making through much of the debt ceiling talks, laboring to work across the aisle even at the risk of alienating the liberal wing of his own party.

But with talk taking a turn for the worse this weekend, he and his team are now being forced to tinker with their approach, dialing up criticism in hopes that the specter of default and public blame for it will move GOP negotiators.

On Sunday, Biden called on Republicans “to move from their extreme positions because much of what they’ve proposed is simply, quite frankly, unacceptable.”

“There’s no bipartisan deal to be made solely, solely, on their partisan terms. They have to move as well,” he said during a news conference that closed his visit to Japan for the G-7 summit.

Biden’s reluctance to play hardball up to this moment had been driven by twin political bets: That he would come off as a steady hand in stark contrast to the extremes of the Republican Party; and that voters will tune out the Beltway noise, rewarding the president for the job he’s done should the crisis pass.

Biden and his team had been buoyed by their belief that a consensus building approach — though perpetually doubted — worked for them before, including with the passage of an infrastructure package and the far-reaching legislation that became the Inflation Reduction Act. But the debt ceiling standoff has so far proved stubbornly different, with Republicans showing a surprisingly united front and the president risking taking the brunt of the blame if the nation defaults for the first time in its history.

By Sunday, it was clear that Biden had grown wary of the state of negotiations.

“I’m not going to agree to a deal that protects wealthy tax cheats and crypto traders while putting food assistance at risk for nearly 1 million Americans,” he said at one point. “I think there are some MAGA Republicans in the House who know the damage it would do to the economy, and because I am president, and a president is responsible for everything, Biden would take the blame and that’s the one way to make sure Biden’s not reelected.”

For a few days last week, it appeared that Biden’s original playbook would work again. The president shrunk the room of negotiators and enlisted a trio of trusted aides — all, notably, fellow believers in the notion that the public rewards bipartisan deals — for talks with House Speaker Kevin McCarthy’s staff. The White House had privately hoped that the president would be able to return to Washington on Sunday — after cutting short a trip to Asia (a decision he was loath to make) — to shepherd the final stage of negotiations.

But the weekend brought real wrinkles. Republicans rejected the Democrats latest offer and said talks would cease until Biden returned. Fights loomed over the length of caps on discretionary spending, potential slashes to military spending and for how long to raise the ceiling. The White House’s tenor began to change in subtle but obvious ways. Having been unwilling to comment on the negotiations lest they get accused of poisoning the well, top West Wing communications officials began publicly aiming criticisms at Republicans for entertaining default with a barrage of attacks on Saturday.

There is still a belief that reaching a deal remains possible. And, should it happen, the White House feels confident about its ability to claim victory over the content of it. West Wing aides have underscored that its top priorities — including the main pillars of the Inflation Reduction Act — are all being protected. GOP talk of slashing Medicaid and Social Security has vanished from the budget process. If there is no default, White House aides believe the voters will once again ignore how the legislative sausage was made and give Biden credit for his leadership through the crisis.

But the process has taken the White House by surprise in several ways, people familiar with their thinking concede.

One of them was how quickly the crisis approached.

The debt ceiling fight had loomed for a while; it was the center of Biden’s first meeting after McCarthy back in February, not long after the Republican had survived a torturous series of votes to become speaker. But as West Wing aides glided through the posh parties surrounding the White House Correspondents Dinner during the last weekend of April, there was still an expectation that they likely had multiple months before the deadline.

The Monday after the weekend’s glitzy festivities drew to a close, the Treasury Department announced that it would hit its “X date,” the date when federal borrowing measures are exhausted, as early as June 1 — far sooner than most earlier projections. Suddenly, the time for posturing grew short. Aides nervously looked at the May calendar and saw that the House and Senate were only scheduled to overlap in session for a week while the president was slated to be overseas for more than a week attending a series of high-stakes summits in the Pacific.

The other development that surprised the White House was McCarthy’s strength within his party. It had taken 15 votes for the California Republican to become speaker and White House aides believed that he would not be strong enough to hold his disparate conference together.

But McCarthy managed to narrowly pass his GOP spending bill in late April, which allowed him to barrel into the debt negotiations from a place of renewed strength. To this point, he has kept his conference with him. Senate Minority Leader Mitch McConnell, whom officials in both parties thought might swoop in to broker a deal, was sidelined for nearly six weeks after a fall and made clear, upon return, that he would defer to McCarthy.

McCarthy’s approach has, at times, frustrated the White House. He has refused to separate negotiations over the budget and the debt ceiling and scoffed at simply delivering a clean debt ceiling increase, though it has been done many times before under presidents of both parties.

Those positions were largely expected. More grating for administration officials has been McCarthy’s eagerness to appear in front of the cameras to offer his take on the state of play. West Wing aides grumbled that McCarthy began using a talking point that accused the president of waiting months before scheduling a follow up meeting on the debt ceiling, believing it was in bad faith because, despite Biden’s urgings, McCarthy himself had taken months to produce a budget document.

When that much-anticipated second meeting approached last Tuesday with little chance of a breakthrough, White House aides made the difficult decision to pull down the back half of Biden’s trip across the globe. He would still go to the G-7 in Japan but would return early, canceling visits to Australia and Papua New Guinea meant to showcase the United States’ commitment to the region and curb China’s rising influence. Though angry at having to cancel, Biden told aides that he had no choice.

Since then, Steve Ricchetti, senior advisor and arguably Biden’s closest aide, and the other lead negotiators, Shalanda Young, the director of the Office of Management and Budget, and Louisa Terrell, the director of legislative affairs, have had multiple meetings daily with Republican staffers. But after a few days of progress, talks hit a snag as the weekend began. White House aides still hope for a deal but believe voters will punish Republicans who have tried to slash popular programs and threatened political brinkmanship with the prospect of default.

But there is one more hurdle to clear even if a deal is reached in the coming days — another test of Biden’s belief that he can not just navigate Congress’ hyper partisan legislative process but be rewarded for it.

White House senior aides, led by chief of staff Jeff Zients, have been meeting several times a day, gaming out how many votes McCarthy could lose on his right from lawmakers upset at the compromises. Among the questions considered: can enough Democratic votes be produced to offset those defections? Or does McCarthy, fearing his speakership may be doomed, take the nation into default so as not to alienate the conservatives that empowered him?

“Even a deal doesn’t end this thing,” said one senior White House aide. “We’re going to have some very long days ahead.”

HIROSHIMA, Japan —  President Joe Biden wrapped up three days of meetings with G-7 leaders and other allies by staking out a clear position in the debt limit negotiations occurring back in Washington that played out in the background throughout this weekend-long summit.

The president, who said he would speak by phone with House Speaker Kevin McCarthy (R-Calif.) from Air Force One on his flight home, put the onus on Republicans to move toward the middle.

“We agreed the only way to go forward was a bipartisan bill,” he said of his prior meetings with McCarthy and other congressional leaders. “I’ve done my part. … Now it’s time for the other side to move from its extreme positions because much of what they’ve proposed is simply, quite frankly, unacceptable.”

Biden also suggested that invoking the 14th Amendment to raise the nation’s debt limit and avoid a potential default was still on the table, but likely not a move that could be used in the short term with the deadline for default perhaps just a couple of weeks away.

“I think we have the authority. The question is could it be done and invoked in time,” Biden said. “That’s a question that I think is unresolved.”

The president went on a lengthy tangent about how he’s already reduced the country’s deficit by $1.7 trillion. He said he has already agreed in current negotiations to $1 trillion in cuts to baseline spending. And he pushed Republicans to consider his call to raise revenues.

“Revenue is not off the table,” he said. “It’s time for Republicans to accept that there is no bipartisan deal to be made solely — solely — on their partisan terms. They have to move as well.”

Noting all the twists and turns in negotiations since he departed for Japan on Wednesday, Biden expressed optimism that talks might get back on track once he’s back in Washington.

“I’m hoping Speaker McCarthy is just waiting to negotiate with me,” he said.

Debt ceiling negotiations deteriorated after Republican negotiators rejected a White House offer to limit spending on both defense and a series of domestic programs, two people familiar with negotiations said Saturday.

Republicans instead pushed for increased military spending, which would require deeper cuts to a series of domestic spending programs that the White House has deemed off limits. With the deadline for a potential default less than two weeks away, House Speaker Kevin McCarthy said talks would likely not resume until President Joe Biden returned from Asia late Sunday night.

The impasse came as both sides sharpened their rhetoric, with White House aides abandoning their silence with a fusillade of attacks Saturday accusing the GOP of working in bad faith and threatening the financial stability and credit of the nation.

Biden aides offered what they viewed as a key concession by proposing that Congress hold flat it’s spending on defense, as well as a series of domestic programs including housing aid, education and scientific research. The White House — which earlier this year sought major increases by raising taxes — said that the adjustment would instead amount to a cut because of year-over-year inflation.

But the GOP negotiators rejected the offer, instead insisting on increasing spending for the military, veterans care and border security. To then satisfy the GOP demand to slash overall spending, that would mean the resulting domestic spending cuts would have to increase dramatically to what the White House has deemed “draconian” levels.

Republicans claimed that the White House negotiations — led by top Biden staff while the president is at the G-7 summit in Japan — had changed their offer.

“Unfortunately, the White House moved backwards,” McCarthy told reporters at the Capitol on Saturday. “They actually want to spend more money than we spent this year. We can’t do that. We all know how big this deficit is.”

The White House dismissed the claim and sharpened its attacks on the GOP position. Staff members had largely maintained their silence during negotiations but sent out a series of blistering statements and policy memos Saturday, zeroing in on how McCarthy’s insistence on preserving the Trump-era tax cut skewed toward helping the wealthy and giant corporations would add $3.5 trillion to the debt.

“The Speaker’s team put on the table an offer that was a big step back and contained a set of extreme partisan demands that could never pass both Houses of Congress,” said White House press secretary Karine Jean-Pierre in a statement.

“It is only a Republican leadership beholden to its MAGA wing — not the President or Democratic leadership — who are threatening to put our nation into default for the first time in our history unless extreme partisan demands are met.”

When talks stalled early last week, Biden and McCarthy agreed to empower staff members to deal while the president was overseas. Those talks made some progress for a few days before breaking down Friday.

Over the White House’s objections, McCarthy had insisted that negotiations over the budget be twinned with a vote to raise the nation’s debt ceiling — a move that, most years, is done peacefully and in a bipartisan fashion.

Now that the negotiations appear linked, there is growing worry that an agreement won’t come before the June 1 deadline at which time Treasury Secretary Janet Yellen has said she cannot guarantee that the U.S. government will be able to pay all its bills after that date. A possible default would likely sink the U.S. into a recession and rattle the global economy.

The details of the White House’s latest offer were first reported by The Washington Post.