House Speaker Kevin McCarthy said that “every hour matters” in talks with President Joe Biden's team as they work toward a budget deal.
While McCarthy said an agreement deal could come together “at any time,” the Republican speaker — who leads a Trump-aligned party whose hard-right flank lifted him to power — is now staring down a potential crisis.
Lawmakers are tentatively not expected back at work until Tuesday, just two days from June 1, when Treasury Secretary Janet Yellen has said the U.S. could start running out of cash to pay its bills and face a federal default.
Fitch Ratings agency placed the United States’ AAA credit on “ratings watch negative,” warning of a possible downgrade because of what it called the brinkmanship and political partisanship surrounding the debate over lifting the debt ceiling.
"This is a battle between extremism and common sense,” said Democratic Rep. Katherine Clark of Massachusetts, the minority whip.
The Republicans, she said, "want the American people to make an impossible choice: devastating cuts or devastating debt default.”
Weeks of negotiations between Republicans and the White House have failed to produce a deal — in part because the Biden administration never expected to be having to negotiate with McCarthy over the debt limit, arguing it should not be used as leverage to extract other partisan priorities.
McCarthy is holding out for steep spending cuts that Republicans are demanding in exchange for their vote to raise the nation's borrowing limit. The White House has offered to freeze next year's 2024 spending at current levels and restrict 2025 spending, but the Republican leader says that's not enough.
“We have to spend less than we spent last year. That is the starting point," said McCarthy, R-Calif.
Failure to raise the nation’s debt ceiling, now at $31 trillion, would risk a potentially chaotic federal default, almost certain to inflict economic turmoil at home and abroad. Anxious retirees and social service groups are among those already making default contingency plans.
Even if negotiators strike a deal in coming days, McCarthy has promised lawmakers he will abide by the rule to post any bill for 72 hours before voting — now likely Tuesday or even Wednesday.
The Senate, where Democratic Majority Leader Chuck Schumer has vowed to move quickly, would also have to pass the package before it could go to Biden’s desk to be signed into law, right before next Thursday's possible deadline.
Pushing a debt ceiling increase to the last minute is not uncommon for Congress, which has been here before. But it leaves little room for error in a volatile political environment.
Both Democrats and Republicans will be needed to pass the final package in the split Congress.