Negotiators resume weekend debt talks as clock ticks

House GOP leaders and the White House resumed talks on a default-averting debt deal Friday evening, hours after Republicans had publicly announced a pause in those talks.

One of Speaker Kevin McCarthy’s top deputies, House Financial Services Chair Patrick McHenry, confirmed the talks had resumed. Their party's negotiators, led by Rep. Garret Graves (R-Ga.), are now expected to meet again with President Joe Biden’s team of emissaries, including White House budget chief Shalanda Young and top Biden adviser Steve Ricchetti, who was seen in the Capitol on Friday evening. Those talks are likely to continue throughout the weekend.

The North Carolina Republican said he was not confident that a deal can be reached by this weekend: “Not at all.”

While that turnaround by GOP negotiators is a possible sign of progress, Republicans and Democrats are still far apart on key components of a potential deal. One of the biggest hang ups underlying the divisions is how much to cut spending — with Republicans insisting that Democrats aren’t making big enough concessions.

The House GOP passed a bill that would reduce discretionary spending by about $130 billion, returning Congress’ annual budget to fiscal year 2022 levels. Democrats, though, have been unwilling to go that low. In fact, White House negotiators are signaling that they are unwilling to go below fiscal year 2023 levels, which would amount to a funding freeze, according to a person familiar with the discussions.

Rep. Dusty Johnson (R-S.D.) said in an interview Friday afternoon that "The White House refuses to acknowledge that we have a spending problem. Republicans are asking to spend as much in 2024 as we spent just five months ago, and the White House doesn't understand how important that is to the Republican conference."

"Spending caps are the major sticking point, although they're not the only one," he added. "And I'm not at liberty to discuss exactly what the paper being traded back and forth is, but I would tell you, we're just not seeing enough movement on spending."

Negotiators have also been going back and forth on the politically thorny issue of work requirements for social programs, with little agreement in sight.

The two sides appear, however, to have reached a tentative agreement on Covid aid rescissions, in what represents a small breakthrough. But it's still unclear how much will end up being clawed back, according to three people familiar with the discussions.

It’s unclear exactly what led Graves, one of McCarthy’s deputies, to declare Friday morning that he was hitting “pause” on negotiations after several days of meeting with Biden’s negotiators. Both sides have been rushing to reach a fiscal deal designed to avert an economy-crushing default that could hit as soon as June 1.

“We’ve decided to press pause, because it’s just not productive,” Graves told reporters in the Capitol as he left a meeting that had begun around 10 a.m. on Friday. He was joined by McHenry.

A White House official acknowledged that a snag had occurred without indicating that either side had walked away from the table: “There are real differences between the parties on budget issues and talks will be difficult. The president’s team is working hard towards a reasonable bipartisan solution that can pass the House and the Senate.”

Just a day earlier, McCarthy had sounded upbeat about the negotiations, suggesting that White House and Hill negotiators could finalize an agreement in the coming days, with a vote on the House floor next week.

That was already an ambitious timeline without much wiggle room: Since McCarthy has promised members will have 72 hours to read the bill before a vote, Republicans expect they’d need to see text by Tuesday. GOP leaders have insisted they’re trying to avoid forcing votes into the Memorial Day recess, with many lawmakers planning to go abroad on planned delegation trips.

Even so, both parties have acknowledged the difficulty of the negotiations — with a Democratic Party mostly resistant to the GOP’s demand for steep spending cuts and work requirements for social programs. Then there’s the Republican push for energy permitting reform: a tricky policy issue that’s difficult to resolve in just a handful of days, even with Democratic appetite for an agreement there.