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The US Capitol is seen in Washington, DC on May 22, 2023.
A key House GOP negotiator warned Friday that efforts to close a debt-limit deal could quickly collapse or collapse entirely — a warning sign as lawmakers and the White House try to reach an agreement to prevent a default.
GOP chief negotiator Representative Patrick McHenry told CNN after leaving the House Speaker’s office that “there is progress ahead.” “But as we move forward, the remaining issues become more difficult and more challenging. So that’s step-by-step, step-by-step, and at some point, this thing might… come together or go the other way.
But in a major development Friday afternoon that will give lawmakers more time to reach and pass a deal, Treasury Secretary Janet Yellen said Congress must deal with the debt ceiling by June 5 or the U.S. Treasury will not have enough money to pay off all of the nation’s debt. Obligations are complete and on time. Yellen previously estimated June 1 as the earliest possible date for a default.
President Joe Biden said Friday night that he hoped to know whether a deal could be reached by the end of the day. “Negotiations are going on. He told reporters before his departure from Washington over the weekend.
“I hope we will have clearer evidence before the clock strikes 12 tonight. But it’s very close and I’m optimistic,” Biden added.
With no legislation to vote on, House lawmakers also left town for the Memorial Day weekend and will be given 24 hours notice to return if and when they reach a deal.
There have been signs of some progress in negotiations to raise the country’s debt limit, but time is running out as the two sides remain wide apart and the risk of default is rising.
One of the most critical issues in the talks is spending cuts, which Republicans have called for a vote to raise the debt limit. But there were also a series of outstanding issues beyond spending levels as of Thursday night, with the two sides particularly far apart over work requirements for social safety net programs.
Another key GOP negotiator, Rep. Garrett Graves, told CNN that Republicans would be willing to drop work requirements on Social Security programs to reach a deal on the debt ceiling, saying “hell no.”
“Hell no, not a chance,” he said, and suggested the issue focused on food stamps and temporary assistance programs for needy families, not Medicaid.
“Everything is complicated,” McHenry said. “Everybody wants the details, but the biggest issue here is a deal that changes the financial direction of our country. That’s what we’re doing. And that makes it difficult. It’s a consequence.”
Asked whether a deal could be reached on Friday, House Speaker Kevin McCarthy emphasized that they are working as hard as they can.
“We know times are tough,” McCarthy said. “So we work hard, we worked last night. I thought we made progress yesterday. Today I want to make progress again and I want to be able to solve this problem. ”
Under the deal expected by negotiators, the debt ceiling would be raised for two years, as well as federal spending — except for defense and veterans — at the same time, two sources familiar with the negotiations said. A separate source familiar with the negotiations said the two sides are working out details on how long the spending limit deal will last, which Democrats insist should last only until the debt ceiling is raised.
If the deal is secured and ratified, legislation would still need to be written and congressional leaders would have to lock down a vote and wait for legislation to pass both chambers. None of it is easy or instant and any number of pitfalls can pop up along the way.
With each passing day, the stakes are growing as the US moves closer to a potential default.
Adding to the uncertainty is the uncertainty over the timing of the debt ceiling. Rather than deadlines set in stone, they are best estimates. Default by not acting soon enough.
The Treasury Department emphasized this uncertainty by urging Congress to act. “It is impossible to predict with certainty the exact date when the Treasury will be unable to pay all of the government’s bills,” Yellen wrote in a letter to McCarthy on Monday.
“We have learned from the past debt ceiling crisis that waiting until the last minute to suspend or raise the debt limit can seriously damage business and consumer confidence, raise short-term borrowing costs for taxpayers, and adversely affect the credit rating of the U.S. states,” Yellen warned.
This story has been updated with additional developments.