House Republicans reached a tentative deal with the White House on Saturday night to raise the nation’s borrowing limit and avoid a catastrophic default on U.S. sovereign debt.
“We have come to an agreement in principle,” House Speaker Kevin McCarthy said Saturday in the Capitol. “We still have a lot of work to do, but I believe this is an agreement in principle that’s worthy of the American people.”
McCarthy said he spoke to President Joe Biden twice on Saturday about the plan. “I expect to finish the writing of the bill, checking with the White House and speaking to the president again tomorrow afternoon,” said the California Republican, “Then posting the text of it tomorrow, and then be voting on it on Wednesday.”
The deal, he said, “has historic reductions in spending, consequential reforms that will lift people out of poverty and into the workforce, and rein in government overreach. There are no new taxes and no new government programs.”
Biden called the deal “an important step forward that reduces spending while protecting critical programs for working people and growing the economy for everyone.”
He also offered a preview of the White House’s argument for House Democrats reluctant to support a bill that appears on its face to be a Republican victory: In short, it could have been a lot worse.
“The agreement protects my and Congressional Democrats’ key priorities and legislative accomplishments,” said Biden, adding that it “represents a compromise, which means not everyone gets what they want.”
The White House has invited all House Democrats to attend a virtual briefing on Sunday afternoon, presumably to explain what is in the deal and urge Democrats to vote for it.
The announcements marked the start of a lobbying blitz by House and Senate leaders in both parties to convince their members to vote for the package, which will need to win enough votes in the GOP-controlled House and Democratic-held Senate to raise the U.S. debt ceiling in time to meet a June 5 deadline.
At least one senator, Utah Republican Mike Lee, has already threatened to use procedural maneuvers in the Senate to hold up a debt ceiling bill for as long as possible if he doesn’t like what it contains.
In the House, a group of 35 ultraconservative members publicly pressured McCarthy to demand even more concessions from Democrats and to “hold the line.” They, too, indicated they would not support a deal that they thought gave too much away.
A vote to raise the debt limit does not authorize additional government spending. It merely permits the Treasury to meet obligations that were already approved by Congress in the past, some of them, decades ago.
Nonetheless, many Republicans have come to view the biennial vote to raise the debt limit as an opportunity to extract concessions from Democrats in exchange for their votes to avoid a debt default.
This time around was no different. Republicans demanded that the White House agree to a bill that contained, at a minimum, baseline government spending cuts, new work requirements for public assistance, energy permitting reform and the rescinding of unspent Covid emergency funds.
The final push on the deal took place Saturday, in spite of updated guidance from the Treasury Department on Friday afternoon which identified June 5 as the debt default deadline.
That is five days later than the previous Treasury guidance date of June 1. The update was taken by some lawmakers as meaning there would be less pressure on negotiators because the date could slide again.
But that’s not how lead GOP negotiator Rep. Patrick McHenry, N.C., read it. Praising Treasury Secretary Janet Yellen as “a woman of principle [who] is faithful to the law,” McHenry told reporters Friday that the new date put to rest any lingering questions about when default would occur. “Now we know, and this puts additional pressure on us to perform,” he said.
Yellen explained that the agency was “scheduled to make an estimated $130 billion of payments and transfers” during the first two days of June. This would “leave Treasury with an extremely low level of resources.”
The week of June 5, Treasury will owe “an estimated $92 billion of payments and transfers,” Yellen wrote in a public letter to House Speaker Kevin McCarthy.
Unless the debt limit were raised in time and the government was allowed to borrow more, “Our projected resources would be inadequate to satisfy all of these obligations.”
This article was originally published by CNBC.
