Key Republican Says Debt Differences Narrowing But Still No Deal

Republicans and the White House are narrowing their differences over raising the US debt limit but still haven’t reached an agreement to avert an approaching default, one of the main GOP negotiators said Thursday afternoon.

(Bloomberg) — Republicans and the White House are narrowing their differences over raising the US debt limit but still haven’t reached an agreement to avert an approaching default, one of the main GOP negotiators said Thursday afternoon.

Negotiating teams for President Joe Biden and House Speaker Kevin McCarthy communicated back and forth from their offices during the morning. Shortly after noon, GOP Representative Patrick McHenry, one of the negotiators, emerged to tell reporters that the list of issues dividing the two camps had grown shorter.

“I’m not pessimistic,” McHenry, who’s been the least upbeat of the Republican negotiators, told reporters at the Capitol

Biden said at an afternoon White House event that he and McCarthy “had several productive conversations” and “our staffs continue to meet.”

Read More: Biden’s 2024 Bid Set to Collide With Debt Deal’s Economic Hit

McCarthy said in a Fox News interview, “I don’t think everybody is going to be happy at the end of the day. That’s not how this system works.” He added, “I don’t know if we have a deal today.”

Should a deal be reached soon, Tuesday is emerging as the likely day for a House vote. The Senate would then need to act quickly to send it to Biden’s desk before June 1, the date by which Treasury Secretary Janet Yellen has said her department could run out of cash. 

The following day sees a payment due to millions of Social Security beneficiaries, putting pressure on politicians to resolve the impasse.

The two sides don’t yet have any plans for another in-person negotiating session on Thursday, though that could change, said officials in both the White House and Republican camps.

US stocks rose as investor enthusiasm for companies linked to artificial intelligence outweighed concerns about a debt default. Anxiety eased slightly over repayment of Treasury debt maturing around the time of a potential default, with yields for Treasury bills due June 1 down 0.7 percentage points at mid-day, though still more than 3 points higher than debt due just two days earlier.

Listen for more: Unraveling the US Dance With a Debt-Ceiling Disaster (Podcast)

Fitch Ratings Wednesday placed the AAA credit rating for the US on watch for a potential downgrade. The US lost its AAA grade at S&P Global Ratings during a similar partisan standoff on the debt ceiling in 2011.

The White House and Treasury said the Fitch move demonstrated the urgency of reaching a speedy resolution to the standoff. But McCarthy said that he wasn’t worried about Fitch’s announcement, and that negotiators didn’t need the ratings agency to remind them of the importance of concluding a deal.

McCarthy didn’t specify what the sticking points are in the talks, but negotiators have been clashing over the scale and length of limits on spending to be included in a bill raising or suspending the debt ceiling. Economists have warned that even with a deal that avoids a devastating payments default, caps on government outlays could help to tip the US into a recession.

Read More: Modeling US Debt-Ceiling Risk as Talks X-Date Nears

The administration has also pushed back against Republican moves to expand work requirements for some recipients of federal assistance. A White House official on Thursday said both sides are dug in on the issue and the president is fighting policies that push Americans into poverty or take away their health care.

The two sides have made some progress, however. There is an emerging agreement to include a measure easing approval of power transmission lines, according to a person familiar with the negotiations. That could be the backbone of broader agreement to speed permits for energy projects.

Read More: Debt-Limit Negotiators Eye Faster Energy Permits in Deal 

With June 1 just a week away, any deal will need speedy action in both chambers of Congress in order to reach President Joe Biden’s desk in time. In the Senate, it could take agreement of all senators to speed past parliamentary hurdles that can add days to the debate.

One conservative GOP senator, Mike Lee of Utah, on Thursday morning threatened to prevent that from happening if a final deal isn’t to his liking. He tweeted that he will “use every procedural tool at my disposal to impede a debt-ceiling deal that doesn’t contain substantial spending and budgetary reforms.”

But he didn’t say whether he might slow down a temporary debt-ceiling extension if talks push past the deadline.

McCarthy told reporters he has been in touch with both his counterpart in the Senate, Republican leader Mitch McConnell, as recently as Wednesday and former President Donald Trump “the other day.”

Read More: Any Debt Deal Still Faces Time-Consuming Hurdles in Congress

–With assistance from Ryan Teague Beckwith, Akayla Gardner, Zach C. Cohen, Laura Litvan and Jennifer Jacobs.

(Updates with Biden comment in fourth paragraph)

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