Shalanda Young couldn’t sleep.
A small team of Biden administration officials has spent the past two days in intense negotiations with House Republicans to avoid a catastrophic government default. Mr. Young, the White House budget director, exchanged proposals for a federal spending cap with negotiators represented by Chairman Kevin McCarthy. McCarthy’s Republican caucus had refused to raise the $31.4 trillion national borrowing limit without significant cuts.
Now, while scrolling through Netflix in search of “terrible TV” to soothe his pounding heart, Young felt depressed. What if, after cutting spending and raising the debt ceiling, the deal ends, but when the annual appropriations bill is passed this fall, Republicans try to push for even bigger cuts?
At work the next morning, Mr. Young asked his staff how they could prevent that from happening. They agreed on a plan that would essentially penalize Republicans’ most cherished spending programs if they didn’t comply with the terms of the agreement. He then forced Republicans to include the plan in the bill that codified the agreement.
The approach reflects the broader strategy of President Biden’s team in the debt-limit negotiations, according to interviews with current and former administration officials, some Republicans and others familiar with the negotiations.
That strategy came to a conclusion on Saturday when Mr. Biden signed into law the 2023 Fiscal Responsibility Act. It came days before a possible default and after weeks of talks and an insurrection by right-wing members of the House of Representatives put the deal in jeopardy. of collapse.
The Biden team seeking a deal knew that Mr. McCarthy was ready to win over Republicans on political issues to pitch the bill to his convention. They eventually got McCarthy’s team to argue that the deal included drastic spending cuts, a huge recovery of unused federal coronavirus relief funds, and harsh working conditions for federal aid recipients. .
But in the details of the document and the many side deals that came with it, the Biden team practically wanted to win. They believe so, with one big exception—a $20 billion reduction in the Internal Revenue Service’s enforcement funding.
Administration officials see the spending cuts from a perfect final deal no worse than expected from a regular spending bill passed by a split Congress. They agreed to frame the cuts to save $1.5 trillion over ten years in the eyes of the bipartisan Congressional Budget Office. But thanks to a collateral deal that includes some accounting tricks, White House officials say the deal’s central spending cap will only cut $136 billion over the two years it can take effect. We estimate that it may stay.
Biden officials say most of the $30 billion recovered from COVID-19 probably never went unspent, including money from the essentially terminated Aviation Manufacturing Jobs Program. said that
At one point in the talks, administration officials proposed including more than 100 relief programs in the deal that could even cancel funding. The final list covered 20 of the 99-page bills, which McCarthy defended on the House floor. But much of that money was repurposed for other spending, leaving him with only about $11 billion in net savings over two years. His one of the programs had a balance of just $40.
Many Democrats remain furious that the deal includes new working conditions that could deprive 750,000 of them of food stamps, and the Biden team reluctantly accepts. concluded that they did not obtain
Officials knew that this move alone could erode support for the Democratic deal in Congress. So they tried to balance out efforts to expand food stamp eligibility for veterans, the homeless, and others, and Republicans agreed. The Budget Bureau concluded that the change actually added an online recipient to the program.
Some Democrats and progressive groups have sharply criticized Mr. Biden for not negotiating a debt ceiling at all, criticized spending cuts and working conditions, and raised a debt ceiling every time Democrats took over the White House. They argue that Mr. Biden solidified the Republican Party’s ability to demand ransom.
Republican negotiators pitched the deal as a game-changing blow to Mr. Biden’s spending ambitions. Louisiana Rep. Garrett Graves said before Wednesday’s House vote that “these negotiations are definitely going to leave tire marks.”
Biden takes a different view. On Thursday evening, as the Senate prepares to pass the deal, he joins White House chief of staff Jeffrey D. Zientz, presidential adviser Steve Rickety and other aides in Mr. Zientz’s office in the West Wing of Congress. gathered in the room. White House. Mr. Biden asked them a so-called scorecard question. What percentage of Democrats in the House voted for the deal, and what percentage is expected to vote in the Senate?
Mr. Biden was delighted when Mr. Ricketty told him that both houses of Congress would have more Democrats than Republicans supporting the deal. In his view, it proved that he had cut a significant amount of money.
Mr. Zientz mentioned that voter turnout in an interview on Friday. “Going back a few months, no one would have thought this was possible,” he says.
It was not a sure result. The negotiating team came to the table with differing views on the causes of federal debt in recent years. White House negotiators condemned Republican tax cuts. Republicans have criticized Biden’s economic policies, including the 2021 debt-financed coronavirus relief bill and the bipartisan infrastructure bill later in the year.
The controversy was sometimes blasphemous. At one point, after Mr. Biden’s negotiators criticized the 2017 Republican tax cuts, Mr. McCarthy’s “very mild” aides stood up and waved the finger at the Biden campaign, using vulgar language to criticize them. He responded enthusiastically that the discussion was nonsense. said Graves.
For months, Mr. Biden has said he would not negotiate a higher borrowing limit. But many of his aides had been secretly planning talks all along — though they didn’t admit that the talks were related to the debt limit. The Biden team reasoned that fiscal issues would need to be negotiated this year anyway, both for the appropriations bill and for programs such as food stamps included in the regularly reauthorized Farm Bill.
Biden’s economic advisers, including National Economic Council Chairman Lael Brainard and Treasury Secretary Janet L. Yellen, warn of catastrophic damage to the economy if the government fails to pay its bills on time. Was.
The president seemed victorious even before negotiations began. During his State of the Union address, he urged Republicans to agree that Social Security and Medicare would be off limits to negotiations. This is thanks to a spontaneous riff from a passage of speech he’s been working on extensively a few days ago. He proposed a budget plan that included higher taxes on the wealthy and big business to reduce debt, but refused to engage in serious talks with McCarthy until Republicans presented their own spending plans.
In late April, the House of Representatives passed a bill that would save $4.7 trillion in spending cuts, end clean energy tax cuts, and return money to coronavirus relief and the IRS. The bill included work requirements and measures to accelerate fossil fuel projects. 1 year loan limit.
Mr. Biden soon agreed to appoint a negotiating team, even though the stalemate drew criticism from business groups and others who feared the U.S. could run out of cash before raising the debt ceiling. The White House team is led by officials including Young and one of his aides, Michael Linden, who left the White House to help negotiate with Legislative Director Louisa Terrell and Rickettti. delayed.
McCarthy’s negotiators gave Biden officials the impression that at least one issue from every major aspect of the House Republican debt-saving bill would be needed to reach a deal.
The talks had some surprising developments. The Republican team has temporarily accepted relatively modest proposals to boost tax revenue, including closing loopholes that benefit some property owners and cryptocurrency traders, according to multiple White House officials. . These discussions quickly stalled.
Democrats agreed to early construction of a natural gas pipeline, following a promise made to West Virginia Democratic Senator Joe Manchin III to support climate legislation signed by Biden last year. is recognized by officials.
The spending cap is exactly what many of Mr. Biden’s aides had predicted in closed-door discussions months ago. But few White House officials thought they would have to give up $20 billion of the $80 billion Democrats approved last year to help the IRS crack down on tax fraud. Mr. Biden hammered out the amount in his final phone call with Mr. McCarthy.
Young said the cut was painful. “It’s not just for me,” she added. “We’ve talked about it a lot with the president. He cares a lot about it.”
Thursday evening, in Mr. Zientz’s office, the president and his team focused on the upside. They’ve blocked a decade of Republican attempts to repeal climate change laws, add new work requirements for Medicaid recipients, and impose binding spending caps. Mr. Biden was particularly pleased that key veteran programs would not be cut.
On Friday morning, Mr. Zientz gathered core officials in his office, as he had done every day for several weeks in a row. Brainerd and his economic team are relieved that the threat of default has been averted, not just this year, but throughout the upcoming presidential election. Aides worked to refine Mr. Biden’s remarks scheduled for Friday night’s Oval Office address.
The speech began at 7:01 p.m., an unusually early time for Biden. By then, his staff had already celebrated. An hour earlier, happy hour had begun in Mr. Zientz’s office.
Katie Edmonson contributed to the report.
