#White House, GOP getting ‘very close’ to budget and debt limit deal

Top Democrats and Republicans sent strong signals Friday night that they’re nearing an elusive agreement on a debt-ceiling increase to prevent an economy-rattling government default. 

While negotiators said it was too soon to announce a deal, both sides voiced confidence that they were within striking distance of a compromise to lift the government’s borrowing cap while taking steps to rein in deficit spending — legislation that took on greater urgency Friday afternoon when the Treasury Department announced that the government will run short of cash on Jan. 5. 

Leaving for Camp David on Friday, Biden told reporters that negotiators are getting “very close” to a deal.

“I’m hopeful we’ll know by tonight whether we are going to be able to have a deal,” Biden said.

At least one GOP negotiator on Friday evening agreed with that assessment.

“I would concur,” Rep. Patrick McHenry (R-N.C.) told reporters. 

But McHenry cautioned that there are “significant challenges ahead,” and that he did not know whether it would take “hours or days” to resolve those issues.

The comments came amid a marathon meeting with McHenry, Speaker Kevin McCarthy (R-Calif.) and Rep. Garret Graves (R-La.), another top negotiator, in the Speaker’s office in the Capitol, where the Republicans huddled all day Friday in search of a breakthrough with the White House team. 

Treasury Secretary Janet Yellen on Friday gave lawmakers and the White House a little more breathing room when she nailed down a specific debt default “X-date” of June 5. She had previously said that the U.S. could default on its obligations in early June — and as soon as June 1 — but without certainty. 

The hard deadline appeared to light a fire beneath the negotiators, who have voiced frustration in recent days about the recalcitrance of the other side, but softened that tone on Friday night with a new mood of optimism. 

“The president said ‘hope,’ and I concur,” McHenry said. 

But even with four extra days to pass a debt increase, negotiators are under pressure to strike a deal as soon as possible so a bill can work through the legislative process. House Republicans pledge that they will hold firm to a rule requiring 72 hours from release of bill text to a floor vote, and Sen. Mike Lee (R-Utah) has vowed to use procedural tools to delay the bill in the Senate if the cuts do not, in his view, go deep enough.

McHenry said the June 5 date “maintains and ensures the urgency” to reach a deal, but that negotiators are still “within the window” to meet that deadline.

Those involved in negotiations are drafting text for a debt limit increase bill as they go along — a sign that they have reached agreement on some measures.

“As we’re going along, we’ve decided that we have to make sure that the text is aligned. And so that is a laborious piece of this thing,” McHenry said. “It doesn’t mean that everything’s done, because there’s still sticky, sticky things that have to get taken care of.”

But major sticking points remain, such as the GOP’s demand for increased work requirements on public benefits programs like the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and Medicaid.

House liberals are adamantly opposed to the tougher work requirements, saying they would hurt low-income families that rely on federal benefits for fundamental needs like food.

They’ve warned that they’ll oppose any final deal that includes that provision — a real threat to the legislation, which will need Democratic votes to pass — and the White House on Friday evening indicated that it’s listening to its liberal allies, digging in on its opposition to the work requirements.

“House Republicans are threatening to trigger an unprecedented recession and cost the American people over 8 million jobs unless they can take food out of the mouths of hungry Americans,” White House deputy press Secretary Andrew Bates said in a statement. 

Earlier on Friday, GOP negotiator Rep. Garret Graves (R-La.) flatly rejected letting up on the work requirements demand, telling reporters: “Hell no!”

“Think about this for just a minute: Democrats right now are willing to default on the debt so they can continue making welfare payments for people that are refusing to work,” Graves said. “And I’m talking about people that are without dependents, people that are able-bodied between 18 and 55.”

Another potential sticking point revolves around the fate of $80 billion for the IRS that Biden and the Democrats approved last year. The funding is earmarked largely to empower the agency to process tax claims more efficiently and go after tax cheats, particularly wealthy individuals and corporations that don’t earn traditional salaries, and therefore don’t have income taxes automatically withheld. 

But Republicans have condemned the extra funding, arguing falsely that it would empower an army of auditors to target middle-class workers. The GOP’s House-passed bill clawed back the entirety of the $80 billion, and the White House has reportedly been open to cutting $10 billion from the agency, which would go toward backfilling domestic programs that might be cut as new spending caps take effect.

Democrats in Congress oppose the IRS cut, noting that it will add to deficit spending by reducing revenues. 

“That’s an unnecessary concession when you consider we’re back to the same issue: The people who pay their taxes through their withholding, they pay them on time,” Rep. Richard Neal (D-Mass.), senior Democrat on the Ways and Means Committee, said this week.  

Mychael Schnell contributed.