Debt talks head into weekend with no deal as Yellen adjusts default deadline

Negotiators on Friday were handed a critical extension on a pressing debt limit deadline that once loomed as soon as June 1.

Yet even with those extra days, House GOP leaders insist they’re pressing ahead with just as much urgency as they seek a final agreement with the White House sometime in the coming days.

“It maintains and ensures the urgency,” House Financial Services Chair and GOP negotiator Patrick McHenry (R-N.C.) told reporters Friday evening, noting some “skepticism” of the earlier date within his party.

The new deadline of June 5 — which Treasury Secretary Janet Yellen announced in a new letter to Speaker Kevin McCarthy on Friday afternoon — comes as negotiators have struggled to land an agreement on key issues like spending and work requirements, after days of frenzied talks.

Entering the weekend, Republican negotiators said they had not yet scheduled any in-person meetings with their White House counterparts, though they added they are in “constant” communication via calls and other electronic communications. And while McHenry stressed that both sides were intent on reaching a deal, he said major issues remain.

“We’re going back on final important matters, and it’s just not resolved. These things take time,” McHenry said. “We’re waiting for the White House to understand the current set of terms we’re dealing with.”

But just before he left the White House on Friday night for Camp David, President Joe Biden expressed hope about the direction of the talks.

“Things are looking good. I’m very optimistic. I hope we will have some clear evidence tonight — before the clock strikes 12 — that we have a deal,” he told reporters as he headed to Marine One. “Hopefully we will know by tonight whether we are going to be able to have a deal.”

There have been indications that House Republicans and the White House are making real progress. The two sides have all but finalized the spending portion of discussions, a source familiar with the talks told POLITICO late Thursday night.

Also on the table, according to multiple people familiar with the discussions, is a new procedure in place to incentivize Congress to pass all 12 spending bills and a plan to claw back unspent Covid money. Democrats say they have agreed to lift the debt limit through 2024, but a Republican familiar with the talks warned that negotiators still had not reached a deal on how long the debt limit extension would be.

Those leaks have sparked heartburn from McCarthy’s conservative flank, threatening to crack the unity House Republicans have portrayed since they passed their own debt plan. McCarthy, however, downplayed the criticism from the right, saying that they “don’t know what is in the deal.”

“I’m not concerned about anybody making any comments right now,” McCarthy said Friday.

And McHenry warned that the detail drip could impede negotiators’ ability to lock down an agreement.

“The tweets, the content, the details, and all this stuff, the leaks, don’t serve getting an agreement that changes the trajectory of the country,” he said.

But both sides do, generally, agree that they are making progress, even as the country slides closer to the new June 5 deadline.

McCarthy told reporters Friday that he thought “We made progress last night. We’ve got to make more progress now.” He and Rep. Garret Graves (R-La.), the lead GOP negotiator, also had a powwow earlier Friday on a shared bike ride.

“I’m going to work as hard as we can to try to get this done, make more progress today, and finish the job,” McCarthy said.

But work requirements and permitting reform remain two major sticking points. The White House, according to a person familiar, is “continuing to push against measures that they are concerned would drive Americans into poverty or take their health care away.” But Republicans are accusing the White House of digging in and wanting to pay people who are “able bodied with no dependents” to stay home.

“Democrats right now are willing to default on the debt so they can continue making welfare payments for people that are refusing to work. And I’m talking about people that are without dependents, people that are able-bodied between 18 and 55,” Graves told reporters on Friday afternoon.

Asked if Republicans were willing to drop work requirements, he added: “Hell no.”

The White House, for its part, pushed back strongly on the GOP’s continued effort to add new work requirements to social safety net programs as part of the deal.

“House Republicans are threatening to trigger an unprecedented recession and cost the American people over 8 million jobs unless they can take food out of the mouths of hungry Americans,” White House spokesperson Andrew Bates said, citing GOP demands for “new, additional work requirements designed to tie the most vulnerable up in bureaucratic paperwork, which have shown no benefit for bringing more people into the workforce.”

Once negotiators are able to reach an agreement, lawmakers expect it will take one or two days to turn it into legislative text. Republicans have also pledged to wait 72 hours once that is finalized before any vote — part of the deal McCarthy struck with conservatives to win the speaker’s gavel.