WASHINGTON–Treasury Secretary Janet Yellen announced on Friday that the expected debt ceiling deadline will be extended to June 5, four days later than previously expected.
But in her letter to Congress, Yellen again warned that failing to raise the borrowing limit would “cause serious difficulties.”
Yellen’s latest letter to lawmakers on “X dates” was sent as Congress closed for the long Memorial Day weekend.
He said the Treasury Department took extraordinary steps not taken since 2015 to restore the US fiscal situation to this point.
The X-Date arrives when the government has exhausted the measures it has been using since January to expand existing funds and no longer has enough fiscal cushion to pay all its bills.
Earlier Friday, House Speaker Kevin McCarthy said Republican debt negotiators and the White House were at a “critical moment” as they struggled to reach a deal with President Biden to curb federal spending and raise the debt ceiling. said there is. National borrowing limit Ahead of looming deadlines.
They hoped to end weeks of frustrating negotiations and reach a deal by the end of the week.
The Treasury Department now says that as early as a week from Monday, the government could begin to run out of money, sending the U.S. into a catastrophic default. Economic ripples around the world.
As lawmakers were out of town for the long weekend, anxious retirees and social services groups were drawing up default contingency plans.
next batch social security checks I am planning to go out next week.
“The world is watching,” International Monetary Fund Managing Director Kristalina Georgieva said after meeting with Yellen on Friday.
“Let us remember that it is now the twelfth hour.”
Democrat Biden and the Republican chairman had narrowed their disagreements as they worked to work out the details of a two-year deal that would curb federal spending and remove statutory borrowing limits after next year’s presidential election.
Both deals are political compromises that require support from both Democrats and Republicans to pass in a divided Congress.
Arriving at an empty Capitol, McCarthy said, “I know it’s a crisis,” and acknowledged that more progress was needed.
In his remarks at the White House honoring the Louisiana State women’s basketball team, Biden praised: top negotiator “Hopefully we’re closing a deal,” she said.
He noted Shalanda Young of the Office of Management and Budget, who attended the event as well as Louisiana Rep. Garrett Graves, a top Republican negotiator.
While the outlines of an agreement to cut spending in 2024 and impose a 1% cap on spending growth in 2025 are taking shape, the two countries remain stuck on various provisions.
The debt ceiling, which currently stands at $31 trillion, will be lifted for two years to pay off the national debt.
A person familiar with the talks said the two sides were “in-depth” on whether to agree to Republican demands for stronger policies. work requirements For those receiving government food stamps, cash assistance, and medical assistance.
House Democrats say the requirements for medical and food aid are unnecessary.
Asked if Republicans would ease working conditions, Graves quipped: “Absolutely not.”
House Republicans have pushed the issue to the brink, demonstrating dangerous political bravery by leaving town for the Memorial Day holiday.
Lawmakers are tentatively not expected to return to work until Tuesday, just two days after the June 1 “X date” when Treasury Secretary Yellen said the U.S. could default on its debts.
Biden will be away this weekend, leaving for a presidential recuperation in Camp David, Maryland, on Friday and heading to his home in Wilmington, Delaware, on Sunday. The Senate is in recess and will resume after Memorial Day.
“With each step forward, the issues that remain are becoming more difficult and difficult,” negotiator Rep. Patrick McHenry (RN.C.) said at noon Friday.
Weeks of negotiations between Republicans and the White House failed to produce a deal. Partly because the Biden administration resisted negotiations with Mr. McCarthy over the debt ceiling, arguing that the country’s full trust and credit should not be used as leverage to elicit other party priorities. It’s the reason.
“We have to spend less than we did last year. That’s the starting point,” McCarthy said.
One idea is to set a top-line budget figure and add a “snapback” clause that would force cuts if Congress fails to meet new targets during the annual spending process.
When it comes to work requirements for aid recipients, the White House is particularly resistant to measures that could push more people into poverty or deny them access to health care, people familiar with the talks said. .
Over the Republican request to cancel the IRS funding, it remains an “unresolved issue” whether both sides will compromise to allow the money to be directed to other programs in the country, the people said. said.
Another person familiar with the talks said Republicans could ease demands to increase defense spending beyond what Biden had proposed in the budget, and instead propose to keep it at the level Biden proposed. It is said that there is a sexuality.
The team is also looking at proposals from Democratic Senator John Hickenlooper of Colorado to speed up the development of grids to help build grids between regions.
McCarthy, meanwhile, is under pressure from the right wing of the House to stick to any deal, even after the June 1 deadline.
“Let’s keep the line,” said Rep. Chip Roy (R-Tex.), a member of the Freedom Caucus.
McCarthy said he was told by former president Donald Trump, who is running again, to “make sure you get a good deal.”
But wary Democrats are also putting pressure on Biden. The top three House Democratic leaders, led by Rep. Hakeem Jeffries, met with the White House late Thursday.
Even if negotiators reach a deal within days, McCarthy has promised lawmakers they will follow the rule of submitting any bill 72 hours before a vote, now Tuesday or Wednesday. likely to become
The Democratic-led Senate has vowed to act quickly to get the package to Mr. Biden’s desk just before the deadline next Thursday.
Meanwhile, Fitch Ratings put the U.S.’s AAA rating on “rating watch negative” and warned of a possible downgrade.
The White House has long argued that the deficit could be reduced by ending tax cuts for wealthy households and some businesses, but McCarthy told the president at a meeting in February that tax hikes would raise revenues controversially. He said he was told he was ineligible.
Biden has so far denied Invocation of the 14th Amendment House Democrats announced they had all signed a legislative “immunity” process to force the debt ceiling to be voted on to raise the debt ceiling on their own.
But it takes five Republicans to break with the party and tilt the majority to move forward with the plan.
Now that the pandemic emergency is officially lifted, they are almost certain to recoup some $30 billion in unused COVID-19 funds.