WASHINGTON – The White House has delivered a proposal to House Republicans that would cap discretionary spending at fiscal 2023 levels for two years and revoke up to $30 billion in unspent COVID-19 relief funds. Debt ceilingCBS News has learned.
The offer is the latest sign that the two sides may be nearing a deal that would avoid a government default, an unprecedented event that would have a major impact on the global economy. The White House’s latest proposal would extend the debt ceiling for about two years, putting the issue off the table until after the 2024 election.
House Speaker Kevin McCarthy has insisted he wants to cap spending at 2022 levels, and conservative Republicans are pressing McCarthy to “hold the line” on spending cuts. House Republicans passed a bill in April to raise the debt ceiling and cap spending to 2022 levels. The White House argues that a two-year cap on spending would cut spending by more than $1 trillion, a charge not shared by House Republicans.
Talks between the White House and McCarthy’s representatives continued Friday, with some indicating that a deal was in sight. On Thursday morning, McCarthy said negotiators had worked “well past midnight” the night before and said he had ordered his negotiating team to work “24/7” to reach an agreement.
Permitting renovations and work requirements is a work in progress for negotiators, according to a source familiar with the negotiations. Both parties were working to create a mechanism to encourage Congress to pass all 12 annual appropriations bills to fund the government. If an agreement cannot be reached, any short-term continuing resolution would be subject to various spending caps, the source said.
Treasury Secretary Janet Yellen has warned that the US could default and be unable to pay its bills as early as June, and that any negotiated deal would take some time to pass both chambers of Congress. Lawmakers are leaving Washington, D.C., for the Memorial Day recess, though congressional leaders have warned them to be ready to return on short notice.
President Biden reiterated Thursday afternoon that he and McCarthy were at least on the same page about avoiding default.
“Speaker McCarthy and I have had some very productive conversations, and our staff continues to see that we’re talking, and they’re making progress,” the president said Thursday afternoon. “As I’ve made clear time and time again, defaulting on our national debt is not an option. The American people deserve to know that their Social Security payments will be there, veterans’ hospitals will remain open, and economic progress will continue, and we’re going to continue to do so.” Default puts all that at risk. Congressional leaders understand that, and they all agree — there will be no default.”
Catherine Watson and Rebecca Kaplan contributed to this report.