Washington – With the deadline approaching debt ceiling crisisnegotiators from the White House and the Republican leaders in the House of Representatives were closing in on a deal that would prevent any Government default.
CBS News learned Thursday night that the potential deal would raise the debt limit by about two years and restrict federal spending to the same level as fiscal year 2023 for two years.
Under the proposal, spending on defense and veterans programs would increase in 2024, while non-defense discretionary spending would decrease, including in areas such as health care and education.
The proposal would also include converting $10 billion of the $80 billion IRS funding plan that Congress approved last year as part of the Inflation Reduction Act into non-defense discretionary funding.
All discretionary expenditures, both defense and non-defense, would increase by 1% in fiscal 2025, under the proposal.
CBS News learned earlier Thursday that the White House also proposed a deal to cancel up to $30 billion in unspent COVID-19 relief funds.
Both sides hope to reach an agreement to avoid a government default, an unprecedented event that will have wide-ranging effects on the global economy. The latest proposal from the White House is to extend the debt ceiling by about two years, which would put the issue off the table until after the 2024 election.
House Speaker Kevin McCarthy has insisted he wants to limit spending to 2022 levels, and conservative Republicans have been, too. Click on McCarthy To “stay the line” on spending cuts. House Republicans passed a bill in April to extend the debt ceiling and spending cap at 2022 levels. The White House argues that a two-year spending cap would cut spending by more than $1 trillion, a view not shared by House Republicans.
Negotiations between the White House and McCarthy representatives continued Thursday, with some indications that a deal was imminent. McCarthy said Thursday morning that negotiators worked “well after midnight” the night before, and he said he directed his negotiating team to work “24/7” to reach an agreement.
Republican Representative Garrett Graves of Louisiana, one of the House negotiators, told reporters Thursday night that the negotiation process was going “slow.”
“They refuse to negotiate business requirements,” Graves said.
According to a source familiar with the talks, permitting reform and work requirements are still a work in progress for negotiators. The two sides are also developing a mechanism to incentivize Congress to pass all 12 annual appropriations bills to fund the government. The source said that if an agreement cannot be reached, any ongoing short-term decision will be subject to different spending ceilings.
Treasury Secretary Janet Yellen has warned that the US could default and be unable to pay its bills as soon as early June, and it will take some time for any deal negotiated to pass both houses of Congress. Lawmakers are leaving Washington, D.C., for the Memorial Day recess, even though congressional leaders have warned them to prepare to return at 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 many productive conversations, and our staff continues to meet as we speak, as a matter of fact, and they’re making progress,” the president said Thursday afternoon. “I’ve made it clear time and time again, defaulting on our national debt is not an option. The American people deserve to know that Social Security payments will be there, that Veterans Hospitals will remain open, that economic progress will be made and we’re continuing to do so.” Negligence puts all of that at risk. Congressional leaders understand that, and they’ve all agreed — there will be no default. “
— Nancy Cordes, Kathryn Watson, and Rebecca Kaplan contributed to this report.
Weijia Jiang
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