Debt limit talks broke down again Tuesday as negotiators described the disagreements over spending levels and other policy add-ons as too far of a gap to bridge.
Rep. Garret Graves, R-La., one of Speaker Kevin McCarthy’s proxies in the negotiations, said Tuesday evening that no further meetings with the White House negotiators were scheduled but Republicans would be ready to meet once there’s something new to discuss.
“There is a significant gap between where we are and where they are on finances,” Graves said, noting the White House has not presented any offers to bridge that gap.
Graves and Rep. Patrick T. McHenry, R-N.C., another McCarthy proxy, still stayed at the Capitol late Tuesday, touching base with White House negotiators by phone as each side worked separately to come up with new ideas to break the impasse. As they left just before 11 p.m., Graves and McHenry said no progress had been made in bridging the gap between the two parties over spending levels and that no Wednesday negotiating meeting had been scheduled.
“We’ve, I think, made some progress internally and in terms of us thinking about this a little bit more creatively, but we’re not there,” Graves said.
Republicans want to cut fiscal 2024 spending to the fiscal 2022 level, or at least below the current year, and cap annual growth at 1 percent for several years following.
Democrats have offered to freeze spending at the fiscal 2023 level — although the parties disagree about what baseline is being used for the freeze — and do not want to agree to more than two years of spending caps.
Republicans said that’s not enough.
“The speaker’s made clear to us, this isn’t just a, ‘Hey, we want to have just a sugar high for one year in regard to reducing spending.’ He wants us to truly put the country on a different trajectory,” Graves said.
McHenry said White House negotiators, who are “really talented people,” seem to have a directive “from the top level of the White House” that they can’t agree to spend less than the current fiscal year.
“They’re completely misreading the situation. And it’s very dangerous,” McHenry said.
Graves likened the White House negotiators to used car salespersons. “They’re going to say, ‘Well, I gotta go talk to my manager. Oh, sorry, the manager won’t drop the price, but he’ll throw in car mats,’” he said. “That doesn’t do it.”
The White House did not respond to a request for comment.
House Minority Leader Hakeem Jeffries, who has been briefed on the talks, told reporters that Republicans are not offering any ground toward a compromise that could get Democratic votes, which will be needed to pass any deal.
“Republicans have taken the position that it’s my way or the highway,” the New York Democrat said.
Jeffries declined to say whether President Joe Biden’s offer to freeze spending at fiscal 2023 levels is a floor for his party, but he said it “is an approach that actually represents finding common ground.”
“It’s less than what President Biden asked for in his budget,” he added. “But it doesn’t go as far as the dramatic, draconian and devastating cuts that extreme MAGA Republicans want.”
Neither side offered any indication of how to close the gap on spending levels. McHenry said resolving that “is not something that is easily knitted up on a give-and-take.”
Duration still an issue
Republicans said even the duration of a debt limit increase has not been agreed to yet. Graves said GOP negotiators have “not moved off” the House-passed bill, which provides for a $1.5 trillion debt limit increase or suspension through March 31, whichever comes sooner.
Democrats have sought a two-year debt limit increase to ensure Biden and Congress do not need to negotiate on this again before the 2024 election.
“That is a point of separation between the House and the White House right now,” Graves said.
McHenry said a disagreement over Republicans’ desire to expand work requirements for recipients enrolled in programs like Supplemental Nutrition Assistance Program and Temporary Assistance for Needy Families is also unresolved.
“We think that is a fundamental part of any deal to be had and this White House has fought us tooth and nail on work requirements,” he said.
Another disagreement is over revenues. Democrats say if Republicans want significant deficit reduction it can’t come solely from spending cuts, but Republicans have ruled out tax increases.
Jeffries said Biden “reasonably” offered ideas for raising additional revenue, like revisiting the 2017 tax cut law only Republicans voted for, as well as “wasteful subsidies to Big Oil and Big Pharma.”
Republicans have rejected all of those ideas, Jeffries said. “That is an effort to take this country on a reckless legislative joy ride to a dangerous default,” he said.
Democratic sources familiar with the negotiations said their party is putting these ideas on the table because Republicans think they get their own “signature wins,” like relaxed permitting rules for oil and gas projects and expanded work requirements for low-income benefit programs, without giving Democrats something of equal value in return.
If Republicans drop their partisan demands and focus on policy issues where both parties have interest, then Democrats would do so too, these sources said.
Graves said any final agreement will include priorities of the Biden administration but that one win for the White House will be an increase in the debt limit for more than a few months.
“We’re willing to give them an increase in debt ceiling,” he said. “That’s what they’re getting. And as you know, the president has indicated a longer timeline or duration.”
Democrats said lifting the debt limit is not a specific win for their side, when everyone agrees the consequences of not doing so would be catastrophic.
“The House Republicans have taken the position that the only thing they’re willing to yield on is avoiding a default,” Jeffries said. “Avoiding a default is not a Democratic issue or Republican issue; it’s an American issue. America should always pay our bills.”
Graves said he doesn’t see negotiators meeting again until one side has something new to offer.
“If we’re going to come back and just keep rehashing the same discussion, then the answer’s no,” he said. “I suspect that they’re back in their corner … trying to be innovative and trying to come up with new ideas. I mean, that’s what we’re doing.”
For example, Graves said one way to bridge the gap between a White House push to raise revenue as part of a deal and Republicans’ objections to tax increases would be including oil and gas leasing provisions from a House GOP energy package. That bill passed the House with support from four Democrats.
Graves declined to give specifics on areas where negotiators are finding agreement but said they have made progress in some categories.
No deadline wiggle room
Graves and McHenry each said they view June 1 as a hard deadline for resolving the debt limit impasse. Treasury Secretary Janet L. Yellen has told lawmakers that the government will likely run too low on funds to pay all its bills on time in early June and as soon as June 1.
“She has enormous experience and she’s a straight shooter … so I don’t think there’s any wiggle room for us,” McHenry said.
He also ruled out a short-term bridge to allow a deal to get to Biden’s desk, saying there are technical challenges that limit the viability of a brief patch.
But some Republicans are more dismissive of the June 1 date and believe Yellen could find more breathing room.
“If Yellen thinks that we need some … cash, I tell you what, there’s $50 billion unobligated COVID money,” Rep. Chip Roy, R-Texas, said. “Why don’t you go get that to help defray any issues you’ve got?”
With time running short and the House scheduled to leave Washington for a Memorial Day recess next week, Graves said he’s expecting House members to be called back to town to pass an agreement.
“If I was looking at a crystal ball right now, I would encourage members to go home on Thursday when we finish up, but also tell them that you’re gonna be back,” Graves said.
Avery Roe and David Lerman contributed to this report.