Emerging U.S. Debt Deal Would Raise Limit, Cap Spending for 2 Years

“We know where our differences lie,” House Speaker Kevin McCarthy told reporters at the Capitol, adding that he planned to work through the holiday weekend there.

“We do not have an agreement yet. We knew this would not be easy. It’s hard, but we’re working. And we’re gonna continue to work till we get this done,” he said.

Should a deal be reached soon, Tuesday is emerging as the likely day for a House vote. The Senate would then have 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.

‘Glad the Market’s Closed’

Representative Garret Graves of Louisiana, one of the negotiators, described the progress as “slow” as he left the offices Thursday night. He said the White House was holding firm in refusing Republican demands to add work requirements to the eligibility criteria for Medicaid and other social welfare programs.

“We have a lot of hangups,” he said. “But that’s one of the bigger issues.”

Representative Patrick McHenry, a North Carolina Republican and another negotiator, asked Thursday evening what he would tell investors about the progress of the talks, quipped, “Glad the market’s closed.” McHenry, the chairman of the Financial Services Committee, is one of McCarthy’s chief negotiators.

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 the Treasury said the Fitch move demonstrated the urgency of reaching a speedy resolution to the dispute. 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.

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.

— With assistance from Jarrell Dillard, Steven T. Dennis, Erik Wasson, Josh Wingrove, Jennifer Jacobs and Constantine Courcoulas.