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GOP, White House Remain 'Far Apart' On Debt Deal, Treasury Asks Agencies About Delayed Payments

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by Tyler Durden
Tuesday, May 23, 2023 - 06:45 AM

The White House and GOP negotiators plan to meet again on Tuesday at 11 a.m. ET to continue negotiations on a months-long impasse over raising the nation's $31.4 trillion debt ceiling before a default occurs.

Republicans say the White House isn't negotiating in good faith, with House Financial Services Chair Patrick McHenry (R-NC) saying on Tuesday that he's not sensing urgency from the White House - which waited months to arrive at the bargaining table at the 11th hour.

"I think it is very important to realize that ‘urgency’ should be the word of the day. And that’s not the vibe I’m getting," he said, adding "I think at the highest levels of the White House, they don't understand the contours of the things that we understand, and that House and Senate Republicans are aligned."

Rep. Garret Graves (R-LA), who authored the House GOP's opening bid on permitting reform, says that Republicans and the White House are still 'far apart' on a deal - with the Biden administration offering to freeze federal spending at current levels, while McCarthy wants to go back to 2022 levels, a difference of roughly $130 billion.

After a Monday night meeting between President Biden and House Speaker Kevin McCarthy (R-CA) - their third meeting, failed to produce meaningful progress, White House aides headed back to Capitol Hill for further talks throughout the night.

House Appropriations Committee Chairwoman Kay Granger, a Republican, also suspended work on pending funding bills this week "to give the Speaker maximum flexibility as talks continue," she said in a statement.

The lack of clear progress continued to weigh on Wall Street with U.S. stock indexes set to open lower Tuesday morning and global markets on edge. -Reuters

According to Punchbowl News, McCarthy says he told Biden that there would be no agreement to a 'clean' debt limit deal which wouldn't include spending cuts, and that he won't agree to raise taxes. The government needs to 'spend less money,' he said, telling Republican lawmakers that 'we are nowhere near a debt ceiling deal yet.'

That said, McCarthy on Tuesday told GOP reps to be able to vote within 24 hours, according to Rep. Hern.

Meanwhile, the Treasury Department has asked federal agencies if they can delay payments, the Washington Post reports, citing two people familiar with the matter, as the Biden administration looks for ways to limp things along until a deal is struck - or June 15 quarterly tax payments roll in, buying Congress a bit more time to negotiate before the so-called "X-date" when reserves run dry.

According to the report, Treasury officials have asked whether there's any flexibility for payments due before early June - though Treasury has not asked any agencies to postpone payments beyond that.

The planning has become increasingly urgent in recent days. Last week, senior Treasury staff sent a memo to federal agencies instructing them to take additional steps to keep the Treasury Department closely apprised of their spending. In the memo — which was obtained by The Washington Post and has not been previously reported — David A. Lebryk, fiscal assistant secretary for Treasury, ordered agency officials to notify Treasury at least two days in advance all “deposits and disbursements” of between $50 million and $500 million. Payments above $500 million require five days notice, the memo said. -WaPo

"Please stress to your staff the importance of these updates during this time and to ensure that your agency’s reports are accurate," reads the memo. "Your reporting offices should be reconciling reported amounts to actual payment activity to ensure the reliability of these reports during the critical period."

Now keep this in mind — if and when the two sides get an agreement, negotiators still have to turn that framework into legislative text, obtain a budget “score” from the Congressional Budget Office and then allow members 72 hours to read the bill. Administration officials privately take umbrage with the idea that McCarthy needs to abide by the 72-hour rule, but the speaker doesn’t believe he has any wiggle room on that.

The best case scenario at this point is that the House will vote on a bill over Memorial Day weekend. But that vote could easily slip into next week — if a deal is reached.

And then the Senate still has to act. That would take a week or so under normal circumstances, although McCarthy said he’s been assured by Senate Majority Leader Chuck Schumer that senators may move faster in this case. -Punchbowl News

On Monday night, the House Appropriations Committee canceled planned markups of four FY2024 Republican-drafted spending bills, the panel announced at midnight Monday.


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