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Debt limit talks back on, this time with change of venue

McCarthy "hopeful" about progress, reiterates demand that Democrats must agree to cut spending

Speaker Kevin McCarthy, R-Calif., talks with reporters about the debt ceiling negotiations in the Capitol’s Statuary Hall on Wednesday.
Speaker Kevin McCarthy, R-Calif., talks with reporters about the debt ceiling negotiations in the Capitol’s Statuary Hall on Wednesday. (Tom Williams/CQ Roll Call)

House Republican and White House negotiators were meeting midday Wednesday on President Joe Biden’s home turf for a change, as the two sides remain apart on spending levels and other priorities in the ongoing debt limit negotiations.

The meeting is taking place at the Eisenhower Executive Office Building next door to the White House, a change from Speaker Kevin McCarthy‘s offices at the Capitol. Rep. Garret Graves, R-La., one of McCarthy’s lead negotiators, said that while the venue is changing at the request of the White House, the message from Republican negotiators is the same.

“We’ve watched as they’ve refused to recognize that there’s a spending problem,” Graves said Wednesday before leaving for the meeting. “We have a deadline that we’re up against, and we have to make sure that we close this gap on the divide.”

On Tuesday, House Financial Services Chairman Patrick T. McHenry, R-N.C., another top negotiator, explained why the previous meetings had been held at the Capitol.

“The reason why we’re having these negotiations in the speaker’s suite, as opposed to being hat in hand at the White House, is because House Republicans passed a plan to raise the debt ceiling,” McHenry said, referring to the House-passed bill that would cut and cap discretionary spending, raise the debt limit by $1.5 trillion, rescind unspent pandemic relief and more.

‘Opportunities for efficiency’

Republicans have been pushing to cut spending for the next fiscal year to the fiscal 2022 topline level, a more than $130 billion cut from the current year spending level. Their bill, which passed the House last month, would then cap spending growth at 1 percent for several following years.

Democrats have offered to freeze spending at the current fiscal 2023 level, but do not want the spending caps to last longer than two years.

Graves has said GOP negotiators are looking for “opportunities for efficiency” to bridge the funding gap, such as redirecting previously appropriated but unspent funds to offset new spending.

McCarthy, R-Calif., said Wednesday he was sending Graves and McHenry to the White House to try to finish the negotiations, and that Republicans had offered “a lot” of concessions in the negotiations, though without much specificity. “I think we can make progress today,” he said.

With Treasury Secretary Janet L. Yellen saying the government could be unable to pay its bills as early as June 1, Graves admitted it is “crunch time” in the negotiations.

Graves and McHenry met with McCarthy in his office Wednesday morning prior to the meeting with the White House. Graves said Republicans worked “all night trying to look at things differently, trying to come up with new ideas. We recognize the urgency here.”

McHenry said Republicans are open to the White House’s ideas, and said he is “hopeful” the two sides can come to a resolution.

At a press conference Wednesday, McCarthy said that other than a clean debt ceiling increase — which Democrats had been calling for for months before finally starting to negotiate — and tax increases, everything else is on the table.

“We’re not going to default,” he said. “We’re going to solve this problem. I will stay with it until we can get it done.”

But he also expressed continued frustration with what he characterized as Democrats’ intransigence on spending. McCarthy said it appeared White House negotiators’ positions were more in line with Rep. Alexandria Ocasio-Cortez, D-N.Y., and Sen. Bernie Sanders, I-Vt. — both of whom have described themselves as democratic socialists — than with the president.

“I don’t understand why Democrats … they can’t find one dollar to cut. It took them all this time to say ‘Oh, we’re willing to freeze,'” McCarthy told reporters at the Capitol earlier Wednesday. “No, you’ve gotta find ways, just as every household would do — we have to spend less than we did last year.”

Balancing act

Republicans are pushing to include some policy priorities included in their debt limit bill in the deal, with changes to project permitting and work requirements emerging as central in the negotiations.

With substantial numbers of Democratic votes needed for any compromise to pass in both chambers, the details of any energy infrastructure project streamlining provisions are important. House Natural Resources ranking member Raúl M. Grijalva, D-Ariz., has been circulating a letter that’s now up to 83 signatures opposing any changes that would weaken the National Environmental Policy Act.

“Under the guise of ‘permitting reform,’ these extreme, ideological attacks on NEPA would eliminate requirements to consider climate change and pollution impacts, cut public input opportunities, and limit judicial review,” the Democrats wrote to their party’s leaders.

And McCarthy still has his right flank to worry about. House Freedom Caucus member Chip Roy, R-Texas, circulated a memo to lawmakers Wednesday, arguing that GOP negotiators shouldn’t give up any of the provisions in the House-passed bill in order to reach a bipartisan deal.

“While House Republicans are fighting for hard-working American families facing a woke, weaponized government at odds with our way of life, President Biden and Democrats have been dragging their feet for weeks to fight for rich liberal elitists who want more spending, more government, more corporate subsidies, and less freedom,” Roy wrote in his four-page memo.

Meanwhile, Yellen said Wednesday that Treasury plans to update lawmakers “shortly” on the state of its finances and how much wiggle room there is on the June 1 deadline. But she doesn’t see much flexibility.

“We no longer see very much likelihood that our resources will enable us to get to the middle or end of June, so sometime in early June,” Yellen said at a virtual briefing hosted by The Wall Street Journal.

If Congress doesn’t raise the debt ceiling, Yellen said that Treasury, and Biden, will face “very tough choices.” She said Treasury won’t be able to pay all of its obligations, and threw cold water on the idea of prioritization.

“I would say that our payment systems have been constructed in order to pay our bills, not to decide which bills to pay and which bills not to pay,” Yellen said. “And so as a general matter prioritization is not really something that’s operationally feasible.”

Paul M. Krawzak, Caitlin Reilly, David Lerman and David Jordan contributed to this report.

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