WASHINGTON, (Reuters) – Democratic President Joe Biden and a Republican negotiator said yesterday they were working on a deal to raise the U.S. government’s $31.4 trillion debt ceiling after the Treasury Department warned that a June 5 default loomed without action.
The two sides have been negotiating for weeks on an agreement to raise the federal government’s self-imposed borrowing limit, with Republicans also pushing for sharp spending cuts. Without a deal, the United States could face a calamitous default.
“Things are looking good,” Biden told reporters. “I’m optimistic.”
Republican Representative Patrick McHenry said he concurred with Biden’s comments, while cautioning that negotiations had not yet concluded.
“I’m hopeful,” said McHenry, one of House of Representatives Speaker Kevin McCarthy’s lead negotiators with the White House. “But we have to make sure we have a line on tax, we have a line on agreement – there’s significant challenges ahead.”
The two spoke, separately, shortly after U.S. Treasury Secretary Janet Yellen said the government would run short of money to pay its bills on June 5. Yellen had previously said that date could come as soon as June 1, meaning that the new forecast allowed for more time but a harder final deadline.
Negotiators are discussing a deal that would lift the limit for two years, but remain at odds over whether to stiffen work requirements for some anti-poverty programs.
McCarthy left the Capitol on Friday following a conference call in which one of his top lieutenants told fellow Republicans no deal had been reached, CNN reported.
Any agreement would have to win approval in the Republican-controlled House and the Democratic-led Senate before Biden could sign it into law – a process that could take more than a week.
Negotiators have tentatively reached an agreement that would cap spending on many government programs next year, according to a U.S. official.
The safety-net programs remained a sticking point. Lead Republican negotiator Garret Graves said his party would not drop its demand that they require more participants to hold a job.
“Hell no. Not a chance,” Graves told reporters.
Biden and his fellow Democrats have resisted a Republican push to require childless adults under age 56 to show they are working or looking for work in order to qualify for the Medicaid health plan and the SNAP food-assistance program.
The Republican proposal would require more participants in those programs to show they are working or looking for work. That would save $120 billion over 10 years but also force more than a million Americans out of those programs, according to the nonpartisan Congressional Budget Office.
Democrats have said the proposal would only create more red tape that would exclude people who would otherwise qualify.
Medicaid and SNAP have scaled back in recent months after expanding dramatically during the COVID-19 pandemic. Biden in particular has resisted the work requirements for Medicaid, which covered 85 million Americans as of January.
The deal under consideration would increase funding for the military and veterans care while essentially holding non-defense discretionary spending at current-year levels, according to the official, who spoke on condition of anonymity.
The deal might also scale back funding for the Internal Revenue Service, which got an extra $80 billion last year, in part to bolster enforcement and bring in more tax revenue. Republicans have sought to revoke that funding.