Emerging debt limit deal would cut spending by less than GOP demanded – reports
The deal Joe Biden and Kevin McCarthy’s negotiators are closing in on would satisfy the GOP’s demand that government spending be reduced, but by less than initially proposed, the Washington Post and New York Times report.
Spending on defense and veterans programs would be allowed to rise, while expenditures on every other aspect of government would be cut under the deal – but replaced by money removed from funding the Internal Revenue Service (IRS) and other government offices, according to the reports. That would be a much less drastic outcome than the bill Republicans passed last month that would have put government spending back at where it was in the 2022 fiscal year, and rescinded $80bn apportioned to the IRS in the Inflation Reduction Act to help improve its services and crack down on tax cheats.
If the new deal holds, it looks to be typical of the sorts of compromises Democrats and Republicans in Washington reach. McCarthy could claim he forced the president to cut spending, while Biden could tell his allies he protected his signature legislative accomplishments.
Key events
DeSantis officials ask lobbyists for campaign contributions in potential breach of state law
Officials working for Ron DeSantis’s administration in Florida have been asking lobbyists for contributions to the governor’s just-announced presidential campaign, a breach of political norms and potentially the state’s laws, NBC News reports.
Campaign staff typically handle fundraising outreach, but the texts from people who work in the governor’s office have raised eyebrows from lobbyists, particularly those who are advocating for projects that would be funded by the state’s budget, which DeSantis has yet to approve.
“What the f— am I supposed to do?” an unnamed lobbyist told NBC. “I have a lot of business in front of the DeSantis administration.”
“It is walking a very close line to what is ethical and possibly legal. It is state employees leveraging their official position to ask people whose livelihood depend on access to state government for money,” another lobbyist said.
While the report says the fundraising tactic is unorthodox at best, it’s unclear if it is illegal. That would depend on whether the officials who sent the text messages asking for donations were using state-owned phones or were doing so while located on state property. NBC quotes an election law attorney as saying that no matter how they did it, it comes off as unsavory.
“At a minimum, even if they are sitting in their home at 9 p.m. using their personal phone and contacting lobbyists that they somehow magically met in their personal capacity and not through their role in the governor’s office, it still smells yucky,” the lawyer said.
As he walked into the Capitol, Kevin McCarthy reaffirmed to the press that progress has been made in debt ceiling talks, Punchbowl News reports:
McCarthy says he thought negotiators made progress last night. Says spending is still the big issue.
— Max Cohen (@maxpcohen) May 26, 2023
Shifting away from Washington for a moment, there’s a significant story developing in Texas, the Guardian’s Victoria Bekiempis reports. Lawmakers there may as soon as today impeach the state’s conservative attorney general on the recommendation of an investigative committee that found a host of improper conduct:
The Texas attorney general, Ken Paxton, teetered on the brink of impeachment Thursday after years of scandal, criminal charges and corruption accusations.
In an unanimous decision, a Republican-led House investigative committee recommended impeaching the state’s top lawyer on 20 articles, including bribery, unfitness for office and abuse of public trust.
The state house of representatives could vote on the recommendation as soon as Friday. If the house impeaches Paxton, he would be forced to leave office immediately. Only two officials in Texas’s nearly 200-year history have been impeached.
However the latest debt ceiling standoff is resolved, a recent government report underscores that the United States is on an unsustainable path when it comes to accumulating debt and budget deficits.
The Government Accountability Office reported earlier this month that America’s public debt will soon be growing at a faster pace than the economy, and within a decade exceed its peak reached in the aftermath of World War II. If nothing is changed by 2051, the debt could grow to more than twice the size of the economy.
What this means is that Washington will have to allocate more money for interest payments, taking funds from elsewhere and potentially harming economic growth. The report also warns that even if the US never defaults, the repeated delays and brinkmanship over increasing the debt ceiling carry their own costs.
“These delays could create disruptions to financial markets, and investors may require higher interest rates to hedge against increased risks, which, in turn, could increase borrowing costs. Failure to raise the debt limit in time to prevent a default would have much more dire economic and reputational consequences,” the report says.
Their deputies may be negotiating behind closed doors, but the feud over who is to blame for America’s high levels of debt continues between Republican House speaker Kevin McCarthy and the White House.
He kicked it off this morning with a tweet blaming Joe Biden for adding to the national debt:
Do you have an extra $800 lying around? That’s how much more you owe as your share of the national debt since January 12th—when I first called on President Biden to negotiate.
His delay has real consequences. His default would be even worse.
— Kevin McCarthy (@SpeakerMcCarthy) May 26, 2023
To which White House press secretary Karine Jean-Pierre responded:
Take a look at this graph and you’ll notice something consistent: the national debt increasing over the past years and decades, under presidents Republican and Democratic alike.
Here’s more from the Guardian’s Joan E Greve on the debt ceiling talks and the deal that may be taking shape:
Joe Biden and Republican lawmakers on Thursday appeared to be nearing a deal to cut spending and raise the debt ceiling, with little time to spare to avoid a potential default that could wreak havoc on the economy and global markets.
The deal under consideration by negotiators would raise the government’s $31.4tn debt ceiling for two years while capping spending on most items, a US official told Reuters. It would also increase funding for discretionary spending on military and veterans while essentially holding non-defense discretionary spending at current year levels, the official said.
The agreement would specify the total amount the government could spend on discretionary programs including housing and education, according to a person familiar with the talks. The two sides, who met virtually on Thursday, are just $70bn apart on a total figure that would be well over $1tn, according to another source.
Emerging debt limit deal would cut spending by less than GOP demanded – reports
The deal Joe Biden and Kevin McCarthy’s negotiators are closing in on would satisfy the GOP’s demand that government spending be reduced, but by less than initially proposed, the Washington Post and New York Times report.
Spending on defense and veterans programs would be allowed to rise, while expenditures on every other aspect of government would be cut under the deal – but replaced by money removed from funding the Internal Revenue Service (IRS) and other government offices, according to the reports. That would be a much less drastic outcome than the bill Republicans passed last month that would have put government spending back at where it was in the 2022 fiscal year, and rescinded $80bn apportioned to the IRS in the Inflation Reduction Act to help improve its services and crack down on tax cheats.
If the new deal holds, it looks to be typical of the sorts of compromises Democrats and Republicans in Washington reach. McCarthy could claim he forced the president to cut spending, while Biden could tell his allies he protected his signature legislative accomplishments.
Debt ceiling compromise reportedly at hand — but passing it is another matter
Good morning, US politics blog readers. It looks like negotiators for Joe Biden and Republican speaker of the House Kevin McCarthy are getting close to agreeing on an outline of a deal to raise the debt ceiling through the 2024 in exchange for cutting some government spending, according to reports that emerged yesterday. That’ll quell fears that the standoff could lead to the US government defaulting on its debt for the first time in history sometime around 1 June, and likely wreck the economy. But McCarthy and Biden are only two men – powerful men yes, but there are 100 senators and 435 House representatives who must decide whether to vote for whatever deal they agree to or not. Expect to hear plenty from them as the agreement is fleshed out.
Here’s what else is happening today:
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Unable to borrow any money, the US government’s cash balance dipped to $49.5bn on Wednesday – less than 24 billionaires, Bloomberg reports.
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The House and Senate are holding only brief sessions today, but House lawmakers are on 24-hour notice to come back to Washington during the Memorial Day holiday weekend to vote on the debt limit deal.
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Biden welcomes NCAA champions the Louisiana State University Tigers women’s basketball team to the White House at 2pm eastern time, and NCAA men’s basketball champions the University of Connecticut Huskies at 5pm.
