President Biden and House Speaker Kevin McCarthy have pushed for higher national borrowing limits and harmful debt, including federal spending caps, new work requirements for some recipients of federal anti-poverty assistance, and funds to help the Internal Revenue Service. A gap remains on a key issue in the debate around default avoidance. Crack down on high-income earners and tax evaders.
The two were scheduled to meet on the phone on Sunday, after a weekend of accusations from halfway around the world between Republican leaders and White House officials.
As Mr. Biden wraps up the seven-nation summit in Japan, the conference call will mark a two-week period in which the federal government could default on its debts, spark a global financial crisis, and plunge the economy into a deep recession. It is scheduled to be held in advance. .
Biden and McCarthy expressed optimism late last week that they could reach a deal that would pave the way for a higher borrowing limit for Congress while cutting some of the federal spending that Republicans have claimed as terms of the debt. stated to be strengthening. – increased limit.
Those hopes have faded at least slightly over the past 48 hours. Mr. Biden’s aides have accused Republicans of backtracking on key areas of the negotiations, and Republicans have accused the White House of refusing to compromise on top priorities for conservatives.
Some of the thorns were likely intended to strengthen the base of each party. Fiscal hardliners in the House are urging McCarthy to demand much bigger concessions from Biden. Some progressive Democrats are pressuring Mr. Biden to end negotiations and instead take unilateral action to challenge the debt ceiling on constitutional grounds.
The two countries found some agreement in talks last week, including reclaiming some of the unused funds from previously approved coronavirus relief bills. They also broadly agreed to put some cap on federal discretionary spending for at least the next two years. But they stick to the details of the cap, how much to spend on discretionary programs over the next fiscal year, and how that spending will be split between the military and other programs.
The White House’s latest proposal would keep both military spending and other spending, including on education, scientific research and environmental protection, flat from this year to next, according to people familiar with both proposals. become. This action will save about $1 trillion over 10 years compared to current budget projections. But that doesn’t mean cutting nominal spending before adjusting for inflation, something Republicans are eager to push.
The bill, which Republicans passed last month, says the combined spending cuts and debt ceiling hike will net about $5 trillion in savings over 10 years compared to current projections.
The latest Republican proposal includes a nominal reduction in total discretionary spending next year. However, the distribution is not even. Under their plan, military spending will continue to rise while other programs face significant cuts.
Biden’s proposal would set a spending cap for two years. Republicans would set it at six years.
Republicans have also proposed several initiatives to cut costs that White House officials have opposed. These include new work requirements for recipients of Medicaid and the Temporary Assistance for Needy Families Program. It would also make it harder for states to seek waivers from the work requirement for certain federal food aid recipients living in areas of high unemployment, but the proposal is part of the Republican debt-relief bill that passed the House of Representatives. was not included.
Republicans also continue to push for cuts in enforcement funding to the IRS, a move that would reduce future federal tax revenues and actually widen the deficit further, the Congressional Budget Office estimates. And they aim to include some provisions in the draconian immigration bill that recently passed the House, according to people familiar with the proposal.
Republican leaders on Saturday continued to blame White House negotiators for deteriorating the so-called debate.
“The White House is rolling back negotiations,” McCarthy said on Twitter. In a separate post, he said Biden “doesn’t expect to save a penny on the federal budget” and took responsibility for the impasse.
White House officials have accused McCarthy of dealing with the most conservative members of Congress, blaming the meeting for difficulties.
“To be clear, the president’s team is ready to meet at any time,” White House Press Secretary Carine Jean-Pierre said in a news release on Sunday. Republican leaders “are threatening to default our nation for the first time in its history unless extreme partisan demands are met,” she said.
Biden was previously scheduled to visit Australia and Papua New Guinea from Japan, but shortened the visit to focus on negotiations. He was preparing to call McCarthy on Sunday after the press conference.
Reporters asked Biden to preview his message to McCarthy during Sunday’s summit. he declined.
