The debt ceiling deadline will be extended to June 5, later than previously estimated, Yellen saysLISA MASCARO, SEUNG MIN KIM, and KEVIN FREKING
May 26, 2023
Treasury Secretary Janet Yellen said Friday the scheduled deadline for the debt ceiling
extended to June 5, four days later than previously estimated.
Yellen reiterated her warning in a letter to Congress that doing nothing to raise the borrowing limit would lead to severe hardship.
Yellen’s final letter to lawmakers on the X date came as Congress broke for the long Memorial Day weekend. She said the Treasury Department had taken an extraordinary measure that has not been used since 2015 to restore the US financial position at this time.
The X date comes when the government no longer has enough financial buffer to pay all its bills, having exhausted the measures it has used since January to stretch existing funds.
Earlier Friday, House Speaker Kevin McCarthy
debt negotiators and the White House had reached crisis time and were scrambling to finalize an agreement with the president
Biden to curb federal spending and lift the country’s borrowing limit before the fast-approaching deadline.
Poll: California voters expect debt deadlock to be resolved, fear economic damage if not
They had hoped to end weeks of frustrating talks this weekend and close a deal. The Treasury Department now says the government could run out of money within a week from Monday, sending the US into potentially catastrophic bankruptcy with economic spillovers around the world.
Concerned retirees and social services were among those making standard contingency plans as lawmakers left town for the long holiday weekend. The next batch of Social Security checks will go out next week.
The world is watching,” said Kristalina Georgieva, chief executive of the International Monetary Fund, after meeting Yellen on Friday. Let’s not forget that we are now in the 12th hour.
Democrat Biden and the Republican speaker narrowed the differences and worked to finalize details of a two-year agreement that would cap federal spending and lift the legal borrowing limit after next year’s presidential election.
Any deal would have to be a political compromise, with support from both Democrats and Republicans to get past the divided Congress.
We know it’s a sticking point, McCarthy said as he arrived at the deflated Capitol building, acknowledging that more progress needed to be made.
In remarks at the White House honoring Louisiana State University’s champion women’s basketball team, Biden shouted out one of these top negotiators and said she was hopefully closing a deal.
He referred to Office of Management and Budget Director Shalanda Young, who attended the event, as well as Rep. Garret Graves of Louisiana, a leading Republican negotiator.
While the deal is contouring to cut spending for 2024 and impose a 1% cap on spending growth for 2025, the two sides remain locked in several stipulations. The debt ceiling, now $31 trillion, would be lifted for two years to pay bills incurred by the country.
A person familiar with the talks said the two sides have delved into the question
to agree with Republican demands to impose tougher job requirements on people receiving government food stamps, cash assistance, and health care.
House Democrats have labeled such requirements for health care and food aid as a nonstarter.
Republicans would give in to work demands Graves, furious: Damn no, no chance.
House Republicans pushed the issue to its limits, showing risky political bravado by leaving town before Memorial Day. Lawmakers are tentatively not expected to return to work until Tuesday, just two days after the X date of June 1 when Treasury Secretary Yellen said the US could be defaulted.
Biden also wants to be gone this weekend and leave Friday for the presidential retreat at Camp David,
and Sunday in front of his home in Wilmington, Del
. The Senate is in recess and returns after Memorial Day.
“Each time progress is made, the remaining issues become more difficult and challenging,” said negotiator Rep. Patrick McHenry (RN.C.) Friday afternoon.
Weeks of negotiations between Republicans and the White House have failed to produce a deal, in part because the Biden administration has resisted negotiating the debt limit with McCarthy, arguing that the country’s full confidence and credit should not be used as a bargaining chip. leverage to weed out other partisan priorities.
We have to spend less than last year. That’s the premise, McCarthy said.
One idea is to fix the topline budget numbers, but then add a “snap-back” provision to force cuts if Congress is unable to meet the new targets during its annual appropriation process.
On job requirements for aid recipients, the White House is particularly opposed to measures that could push more people into poverty or cut back on their health care, said the person familiar with the conversations, who was given anonymity to conduct discussions behind closed doors. to describe.
On the Republican demand to return money to the Internal Revenue Service, it is still an open question whether the parties will compromise by allowing funding to be pushed into other domestic programs, the person said.
According to another person familiar with the talks, the Republicans could relax their demand to increase defense spending above what Biden proposed in his budget, instead offering to keep it at his proposed levels.
The teams are also looking at a proposal to encourage the development of power transmission lines from Senator John Hickenlooper (D-Colo.) to facilitate the construction of an interregional power grid.
Meanwhile, McCarthy feels pressure from the right flank of the House not to budge on a deal, even if it means passing the June 1 deadline.
Let’s hold the line, said Rep. Chip Roy (R-Texas), a Freedom Caucus member.
McCarthy said Donald Trump, the former president running for re-election, told him, Get yourself a good deal.
However, vigilant Democrats are also putting pressure on Biden. The top three House Democratic leaders led by Rep. Hakeem Jeffries
from New York
spoke to the White House late Thursday.
Even if negotiators close a deal in the coming days, McCarthy has promised lawmakers he will abide by the rule of posting any bill 72 hours before a vote is now likely on Tuesday or even Wednesday. The Democratic Senate has vowed to move quickly to get the package to Biden’s office just before the potential deadline next Thursday.
Meanwhile, the Fitch Ratings agency placed the United States’ AAA credit on ratings watch negative, warning of a possible downgrade.
The White House has continued to argue that deficits can be reduced by ending tax breaks for wealthier households and some businesses, but McCarthy said he already told the president at their February meeting that raising revenue from tax increases was off the table.
While Biden has preliminarily ruled out invoking the 14th Amendment to raise the debt limit alone, House Democrats announced they have all agreed to a legislative discharge process that would force a vote on the debt ceiling. But they need five Republicans to break with their party and tip off the majority to pass the plan.
They will almost certainly get back some $30 billion in unused COVID-19 funds now that the pandemic emergency has been officially lifted.
Associated Press writers Mary Clare Jalonick, Stephen Groves, Fatima Hussein, Farnoush Amiri and video journalist Rick Gentilo contributed to this report.
Fernando Dowling is an author and political journalist who writes for 24 News Globe. He has a deep understanding of the political landscape and a passion for analyzing the latest political trends and news.