Tuesday’s Make-or-Break Debt Limit Meeting

Speaker Kevin McCarthy leaves after meeting with President Joe Biden at the White House on May 9. (Photo by Win McNamee/Getty Images)

Lawmakers are facing a deadline and getting antsy: Memorial Day recess is coming up, and they don’t want to have to cancel it to deal with the pesky debt ceiling. 

But unless a deal materializes this week, they might have to.

With the health of the global economy in the balance and a June 1 cutoff quickly approaching, President Joe Biden is set to meet again this afternoon with the top four congressional leaders. The meeting comes after staff spent last week working on the potential contours of a bill to raise the debt limit. Administration officials were projecting optimism about the talks—Treasury Secretary Janet Yellen said over the weekend she was “hopeful” and that the two sides had found some areas of agreement—but House Speaker Kevin McCarthy threw cold water on the situation Monday.

“I still think we’re far apart,” McCarthy told CNN’s Haley Talbot Monday morning. “Seems more like they want a default than a deal.” 

Negotiators are not “in a good place,” he added on Monday night. They’ll need to reach a deal by this weekend for both chambers to pass it on time, McCarthy said. Biden’s trip to Japan for a G7 summit on Wednesday only adds pressure for a breakthrough in today’s talks.

Republicans and Democrats have been in a standoff for months over how to address the nation’s borrowing limit, and it’s still not clear what kind of deal they can strike. Republicans want limits on government spending, expanded domestic oil and gas drilling, and work requirements for social safety net programs in exchange for their support on a debt ceiling bill. But Biden has insisted on a “clean” debt ceiling increase, separate from other policies. 

Congressional and administration staff have reportedly discussed the possibility of spending caps, but that concession is proving difficult for the White House to navigate. The administration wants to keep the limits at only the next two fiscal years, while Republicans want them to last a decade. House Republicans are watching closely: “I would be surprised if a two-year deal could gain support of the conference,” Rep. Dusty Johnson told reporters, describing it as “hard to stomach” for most members.

GOP leaders also want to claw back tens of billions of dollars in unspent pandemic aid, an option Democrats are open to, as well as streamlining permitting processes for energy projects.

Most contentious among congressional Democrats are the work requirements Republicans want to see expanded for recipients of social safety net programs. Biden over the weekend actively ruled out work requirements for Medicaid—which raised alarms among Democrats because he didn’t also reject the idea of expanded work requirements for supplemental food assistance. On Monday night, he appeared to rule out that idea as well.

That leaves only the Temporary Assistance for Needy Families (TANF) program, which directs cash payments to vulnerable families, as a potential area of agreement for stricter work requirements. Republicans expanded rules for TANF grants to states in their debt ceiling bill last month, a move the Congressional Budget Office estimated would save the government just $6 million over a decade.

Liam Donovan, a lobbyist at Bracewell LLP and a former Republican operative, said he thinks it is possible for the negotiators to reach a “deal in principle” or a “deal to do a deal” this week, signaling the path forward. There may not be enough time for lawmakers to finalize a long-term agreement along those lines, though, meaning a short-term debt ceiling hike may be on the table ahead of the June 1 deadline.

McCarthy had a different theory about Biden Monday night. “Maybe his secret plan is to wait until the last minute and pass our bill,” he quipped. “I’m okay with that.”

On the Floor

The House will consider several bills supporting law enforcement officers. A full list of measures the House may vote on this week is available here.

The Senate is considering executive nominations. You can follow floor activity throughout the week here.

Key Hearings

  • Washington, D.C., Mayor Muriel Bowser and other D.C. officials are appearing before the House Oversight and Accountability Committee this morning for a hearing on their policies. Information and video here.
  • The House Administration Committee is holding an oversight hearing this morning on the U.S. Capitol Police force. Information and video here.
  • NASA Administrator Bill Nelson is testifying before senators this morning on the administration’s funding request for the space agency. Information and video here.
  • Two Senate panels are holding hearings this morning about artificial intelligence policies. Information and video here and here.
  • The Senate Foreign Relations Committee is examining American policy toward Russia during a hearing this morning. Information and video here.
  • Gregory Becker, the former CEO of Silicon Valley Bank, is testifying before the Senate banking panel this morning. Former officials from Signature Bank are also appearing. Information and video here. Becker will testify again on Wednesday morning on the House side. Information and livestream here.

Of Note

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Congress wants to regulate AI, but it has a lot of catching up to do

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