Biden, McCarthy quietly negotiate ahead of debt limit deadline after months of partisan rhetoric

After months of rhetorical bomb-throwing between President Biden and House Speaker Kevin McCarthy over the debt limit, both sides are now negotiating quietly to avert a default by June 1.

Negotiators for Mr. Biden and Mr. McCarthy met at the Capitol on Thursday to discuss a path forward on cutting spending and raising the debt ceiling. While both sides have yet to reach a breakthrough, each says that progress is being made.

“We’ve made good progress this week, but the work continues,” said Senate Majority Leader Charles E. Schumer, New York Democrat. “No one will get everything they want … but working together, accepting that nobody will get everything they want, is the way to go.” 

Buoying the talks is the fact that both sides have appointed trusted negotiators who are seen as honest brokers.

Mr. Biden has tapped Office of Management and Budget Director Shalanda Young and Steve Ricchetti, who serves as counselor to the president. The duo has strong bipartisan credentials.

Mrs. Young previously served as staff director of the House Appropriations Committee, for which she earned bipartisan praise. Mr. Richetti, a Washington fixture since the Clinton era, played a key role in helping to craft the White House’s bipartisan $1.2 trillion infrastructure law last year.

House Republicans, meanwhile, have tapped Louisiana Rep. Garret Graves as the chief negotiator. Mr. Graves, a one-time congressional staffer, is respected for his serious and sober approach to policy. 

“He is a former staffer. He’s a former member working in government,” said Mr. McCarthy, California Republican. “He understands policy — many people would call him a policy wonk.”

Negotiators are haggling over spending cuts, and how long the debt ceiling should be hiked.

House Republicans want at least $130 billion in immediate spending cuts. Mr. McCarthy has said half of that money can be made up by rescinding more than $60 billion in unspent pandemic relief.

Democrats are open to the clawback, provided it doesn’t impact money already promised to state and local governments.

“We don’t need it all but the question is what obligations were made, commitments made [for] the money not disbursed,” said Mr. Biden. “I’d have to take a hard look at it.”

Republicans also want to expand work requirements for welfare recipients, cap future federal spending, and streamline the federal permitting process for energy projects. They also want to cancel more than $200 billion in green energy tax credits that Democrats passed last year as part of Mr. Biden‘s signature climate law.

Mr. Biden has signaled that the demand to nix his green energy credits is a non-starter. Still, the White House appears open to some of the Republicans’ other demands.

Negotiators are working to see whether they can combine parts of an energy proposal passed by House Republicans this year with a permitting overhaul authored by Sen. Joe Manchin III, West Virginia Democrat, that Mr. Biden endorsed.

Mr. Biden has also opened the door to accepting expanded work requirements on direct cash payments to needy families, but not Medicaid or food stamps.

House Republicans want welfare recipients to work at least 20 hours of work per week to qualify for Medicaid, food stamps, and direct cash payments. They also want to increase the age limit for work requirements from 49 to 55.

“Remember what we’re talking about — able-bodied people without dependents,” Mr. McCarthy said. “It’s 20 hours per week. You [can] go to school or whatever else.”

There is also division over how long to hike the debt limit, and the length of time that federal spending growth should be capped.

Democrats want a two-year deal for both, saying Congress and the president can grapple with the issue in 2025. Republicans want a one-year extension on the debt limit and at least 10 years of budget caps.

Neither is likely to get everything they want in the talks. Still, the fact that serious negotiations are taking place is a difference from the rhetoric that has defined the debt limit fight for months.

Mr. Biden once refused to negotiate with Republicans for taking the “debt limit hostage.” Mr. McCarthy similarly has gone from lambasting the White House for being unwilling partners to saying there is a “format” for successful negotiations.

“This is the tried-and-true method of negotiation in Washington,” said a senior Democratic aide. “Both sides dig in, hurl insults, and pledge they’ll never compromise. Then when the deadline to pass something gets close, everyone sits down in a room and starts horse-trading.”

Not everyone is willing to accept a compromise. The nearly 40-member House Freedom Caucus said Thursday it was unwilling to accept a watered-down version of the debt-limit proposal passed by Mr. McCarthy last month

“This legislation is the official position of the House Freedom Caucus and, by its passage with 217 votes, the entire House Republican Conference,” the group said in a statement. “There should be no further discussion until the Senate passes the legislation.”

The legislation passed by House Republicans last month would cut spending by $4.8 trillion, while capping spending growth at 1% over the next decade. It would also rescind Mr. Biden’s green energy tax credits and impose work requirements on food stamps, Medicaid, and cash payments.

Conservative hardliners might not have as much influence as they believe, however. A deal struck between Mr. Biden and Mr. McCarthy would likely garner the support of enough moderate House Democrats to pass the chamber. 

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