WASHINGTON (CN) — As lawmakers headed out of town for the weekend and President Biden jetted off to the G7 diplomatic summit, congressional Republicans and White House negotiators temporarily called off talks aimed at avoiding a fast-approaching debt crisis.
House Speaker Kevin McCarthy confirmed to reporters on Capitol Hill Friday afternoon that Republicans and Democrats had reached an impasse in negotiations over the federal debt ceiling, blaming the Biden administration for refusing to budge.
Policymakers have sparred for months over the debt limit, the federal government’s self-imposed cap on spending, which Democrats have said should be increased without conditions. The GOP, on the other hand, has held up efforts to pass what is known as a “clean” debt ceiling increase, arguing that any such measure should be paired with significant spending cuts.
Republicans and the White House have only recently begun negotiating a potential compromise — both the Biden administration and congressional Democrats have blasted the GOP for what they see as an effort to hold the economy hostage to extract budget concessions.
McCarthy on Friday again restated his party’s position on the debt limit.
“We can’t be spending more money next year,” McCarthytold reporters. “We have to spend less than we spent the year before. It’s pretty easy.”
The exact details of where debt ceiling negotiations hit a snag was not immediately clear. A spokesperson for McCarthy’s office did not immediately return a request for comment.
However, Republicans’ counteroffer to the White House’s proposed clean debt increase has several provisions that have proven unsavory to Democrats.
Under the direction of Speaker McCarthy, House Republicans in April wielded their thin majority in the lower chamber to pass their plan, which would give the government one year, or around $1.5 trillion, of debt wiggle room.
In addition, the measure would not only cut federal spending to 2022 levels but would also cap debt growth at just 1% annually over the next decade. The bill, which has little to no chance of passing the Democrat-controlled Senate, would also advance several Republican policy priorities, including rolling back tax incentives for renewable energy made law under the 2021 Infrastructure Investment and Jobs Act and would raise work requirements for Americans receiving federal aid.
The situation is quickly becoming grave for the federal government’s $31 trillion debt ceiling — if lawmakers fail to raise the limit, that could bring on a default that would incur serious economic consequences and damage U.S. credibility globally.
The Treasury Department has warned that a default could occur sooner rather than later. Treasury Secretary Janet Yellen told members of Congress in a letter Monday that her agency’s data suggests it could run out of cash it needs to pay down Washington’s financial obligations as soon as June 1.
“If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” Yellen wrote. Dragging out negotiations isn’t helping either, the treasury secretary argued.
Meanwhile, Senate Majority Leader Chuck Schumer has put the upper chamber’s lawmakers — in recess next week — on notice for a potential debt ceiling vote. The Senate is already considering a Democratic bill that would enact a clean debt increase, but Republicans have said they would oppose such a measure.
President Biden, who was in Japan Friday for the G7 summit and had planned to make a series of state visits over the weekend, has instead cleared his schedule amid the halting debt ceiling negotiations. The White House has said he will return to Washington on Sunday.
Follow @BenjaminSWeiss
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