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Biden, Kevin McCarthy restart debt negotiations after snafu over spending cuts

House Speaker Kevin McCarthy is set to resume negotiations with White House officials over raising the debt limit after talks broke down over spending cuts earlier on Friday. 

“At the speaker’s request, we’re going back in and we’re going to keep talking,” said House Financial Services Chairman Patrick McHenry, North Carolina Republican. “The goal is to get a bill that can pass the House of Representatives and the Senate and get signed by the president. 

Earlier in the day GOP negotiators had walked away from talks when they hit an impasse on several fronts, namely work requirements for welfare, caps on future spending growth and budget cuts. Negotiators are facing a June 1 deadline to raise the nation’s borrowing limit of $31.4 trillion, or the U.S. will default on some of its obligations. 

“There are real differences between the parties on budget issues and talks will be difficult,” the White House said in a statement. “The president’s team is working hard towards a reasonable bipartisan solution that can pass the House and the Senate.”

The pause in negotiations came as Republican and Democratic leaders face increasing pressure to deliver a debt limit deal that can satisfy the right and left flanks of their respective parties.

On Thursday, the more than 40-member House Freedom Caucus called for a suspension of negotiations.

Rather than negotiate, the conservative group said Mr. McCarthy should push for the wholesale adoption of the debt-limit legislation passed by House Republicans 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 would cut spending by $4.8 trillion while capping spending growth at 1% over the next decade. It would also cancel Mr. Biden’s student loan forgiveness program, rescind green energy tax credits, and expand work requirements on food stamps, Medicaid and cash payments.

Mr. Biden has ruled out accepting work requirements on Medicaid and food stamps and is opposed to scrapping green energy tax credits. The White House is also pushing for a two-year deal on spending caps.

Mr. McCarthy, California Republican, said the breakdown was due in part to the White House’s unwillingness to cut spending immediately. Republicans are pushing for at least $130 billion in the upcoming budget, which at least half of Mr. McCarthy said could come from rescinding unspent coronavirus funds. 

“We can’t be spending more money next year,” said Mr. McCarthy. “We have to spend less than we spent the year before. It’s pretty easy.”

Part of the problem for House Republicans is that Mr. Biden is not offering enough spending cuts. 

While Mr. Biden has opened the door to expanding work requirements on recipients of direct cash payments through Temporary Assistance for Needy Families program, the savings would be minuscule. The Congressional Budget Office estimates that expanded work requirements on TANF recipients would only save $6 million through 2033. 

Meanwhile, scrapping Mr. Biden’s green energy tax credits and canceling his student loan forgiveness program would save more than $800 billion over the same period. Similarly, if the growth in federal spending is capped for a decade then more than $3 trillion would be saved. 

House Freedom Caucus Chairman Scott Perry told CBS News that the White House was not negotiating in good faith.

“Until they’re willing to tell us what they’re willing to do, it’s hard to come to an agreement,” said Mr. Perry. “We should probably compromise on something — but there’s nothing to compromise with. They haven’t asked anything.”

The Freedom Caucus nearly tanked Mr. McCarthy’s speakership bid earlier this year. In exchange for allowing Mr. McCarthy’s ascension, conservatives pushed through a rules package that decentralized the power of congressional leadership.

The crux of the overhaul rests on a provision allowing any lawmaker to force a vote on retaining the speaker. Given the narrow Republican majority, Mr. McCarthy can only lose four GOP lawmakers on any single House vote before having to rely on Democrats.

Mr. Biden, who is seeking reelection next year, has a similar problem brewing from the left. The more than 50-member Congressional Black Caucus said they will not back new work requirements on any welfare programs. 

“The Congressional Black Caucus has no intention of allowing families to go hungry to appease Republicans,” said Rep. Steven Horsford, Nevada Democrat. “It’s a recipe for expanding racial and gender disparities, which seems to be their modus operandi.” 

Backing up the CBC’s opposition to new work requirements is the more than-90 member Congressional Progressive Caucus. Rep. Pramila Jayapal, the progressive caucus’s chairwoman, has repeatedly stressed that work requirements are a “nonstarter.”

Meanwhile, 11 Democratic senators are urging Mr. Biden to invoke the 14th Amendment and scrap the debt limit altogether. Some legal scholars say the amendment, which says the validity of the national debt “shall not be questioned,” gives the president authority to keep paying the nation’s bills without Congress setting a debt ceiling. 

While such a maneuver has never been tested and would likely result in a protracted legal battle, the Democratic senators say it is preferable to gutting climate change regulations and kicking people off welfare assistance. 

“It is unacceptable to have the president in a position where Kevin Mccarthy says, you either savage programs for ordinary Americans and flood the country with fossil fuels or I’m going to run the economy off the cliff,” said Sen. Jeff Merkley, Oregon Democrat. “The president has a mechanism to push back. He has the 14th Amendment.” 

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𝗖𝗿𝗲𝗱𝗶𝘁𝘀, 𝗖𝗼𝗽𝘆𝗿𝗶𝗴𝗵𝘁 & 𝗖𝗼𝘂𝗿𝘁𝗲𝘀𝘆:
𝗙𝗼𝗿 𝗮𝗻𝘆 𝗰𝗼𝗺𝗽𝗹𝗮𝗶𝗻𝘁𝘀 𝗿𝗲𝗴𝗮𝗿𝗱𝗶𝗻𝗴 𝗗𝗠𝗖𝗔,
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