Representative Patrick McHenry said Saturday that there are still “thorny issues” in the negotiations between House Republicans and the White House to avert a catastrophic US default.
(Bloomberg) — Representative Patrick McHenry said Saturday that there are still “thorny issues” in the negotiations between House Republicans and the White House to avert a catastrophic US default.
“It’s hours or days, I don’t know when,” McHenry, one of House Speaker Kevin McCarthy’s top negotiators, said at the Capitol.
There is a “very short list” of differences that remain, he added.
If a default did occur, economists project it could send the US into a recession, with widespread job losses and higher consumer borrowing costs spilling into the coming election year.
“The current standoff over the US debt ceiling has the potential to wreak more havoc on the economy than any previous go-around,” wrote Bloomberg Economics chief US economist Anna Wong.
Read More: US INSIGHT: What the Fed Will and Won’t Do If US Defaults
Negotiators for McCarthy and President Joe Biden worked into the night to try to resolve the threat of a default, which Treasury Secretary Janet Yellen says could happen June 5. McHenry said it’s a “severe challenge” to pass a bill before that X-date.
While negotiators continue to haggle, Treasury’s cash balance is dwindling rapidly. It fell to $38.8 billion as of Thursday, the lowest since 2017, according to data published Friday.
McCarthy has pledged to abide by a 72-hour rule to allow lawmakers to review the text before a vote. McHenry said Republicans aren’t budging on that.
That rule, combined with procedural hurdles in the Senate, risk pushing Congress right up to the June 5 deadline.
Work requirements for anti-poverty programs — pushed by Republicans and opposed by Democrats — were among the remaining sticking points Friday night.
On Saturday, McHenry said the “interplay of all the issues”, which include spending caps and the length of any debt deal, means “nothing” is truly solved.
Any deal, McHenry added, must show a trend of lower federal spending over multiple years.
(Updates with market implications, Treasury cash balance starting in fourth paragraph)
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