Biden, McCarthy close in on debt ceiling deal

Unites States President Joe Biden and top congressional Republican Kevin McCarthy are closing in on a deal that would raise the government’s $31.4 trillion debt ceiling for two years.

The deal, which is not final, would increase funding for discretionary spending on military and veterans while essentially holding non-defense discretionary spending at current year levels, a U.S official said, who requested anonymity because they are not authorized to speak about internal discussions.

The White House is considering scaling back its plan to boost funding at the Internal Revenue Service to hire more auditors and target wealthy Americans, the official said.

A second U.S. official said IRS funding is an open issue, but the main thrust is ensuring the agency executes the president’s priorities, even if there is a small haircut or funding is moved around.

The final deal would specify the total amount the government could spend on discretionary programs like housing and education.

The two sides are just $70 billion apart on a total figure that would be well over $1 trillion, according to another source. Both sides met virtually on Thursday, the White House said.

Republican negotiators have backed off plans to increase military spending while cutting non-defense spending and instead backed a White House push to treat both budget items more equally.

Biden said they still disagreed over where the cuts should fall.

Also Read: Biden And McCarthy hold Productive Debt Talks

“I don’t believe the whole burden should fall back to middle class and working-class Americans,“ he told reporters.

House Speaker McCarthy told reporters Thursday evening the two sides have not reached a deal. “We knew this would not be easy,” he said.

It is unclear precisely how much time Congress has left to act. The Treasury Department was warned that it could be unable to cover all its obligations as soon as June 1, but on Thursday said it would sell $119 billion worth of debt that will come due on that date, suggesting to some market watchers that it was not an iron-clad deadline.

Any agreement will have to pass the Republican-controlled House of Representatives and the Democratic-controlled Senate. That could be tricky, as some right-wing Republicans and many liberal Democrats said they were upset by the prospect of compromise.

“I don’t think everybody’s going to be happy at the end of the day. That’s not how the system works,” McCarthy said.

The House adjourned on Thursday afternoon for a week-long break, and the Senate is not in session. Lawmakers have been told to be ready to come back to vote if a deal is reached.

The deal would only set broad spending outlines, leaving lawmakers to fill in the blanks in the weeks and months to come.

Biden has resisted Republican proposals to stiffen work requirements for anti-poverty programs and loosen oil and gas drilling rules, according to Democratic Representative Mark Takano.

Zainab Sa’id