House Speaker Kevin McCarthy is standing firm on Republican demands for expanded work requirements for federal aid to the poor, domestic spending cuts, easing energy permits, and clawing back unused Covid-19 funds in negotiations over the debt limit.
McCarthy declared on Tuesday that there had been “no progress” in talks among senior staff, even as President Biden over the weekend described the same conversations as productive.
Why it matters: Treasury Secretary Janet Yellen warned that “time is running out” to avoid a default in remarks hours ahead of the scheduled White House meeting, the first in-person talks among the leaders in a week.
- Republicans are trying to add new work requirements for Medicaid for “able-bodied” adults without children, apply existing work requirements to older individuals receiving food stamps, and restrict waivers used by states in welfare programs.
- Economists have cautioned that a US default risks triggering a market selloff, a surge in borrowing costs, and a blow to the global economy that could rival the 2008 crash.
- The two sides are at odds over the length of the debt ceiling extension and the number of years to cap spending. The GOP wants to extend the debt ceiling to next March, and Democrats have proposed through December 2024.
- The White House has pushed to exclude elements of a bill passed by House Republicans last month, including eliminating the president’s program to forgive some student loans, as well as signature legislative accomplishments, from discussions.
- Republicans rejected a Democratic proposal that would seek to raise revenue by altering a dozen provisions of the tax code, including a loophole that allows investors in cryptocurrency to claim losses on assets that they then purchase. Democrats also proposed eliminating a loophole that allows large real estate investors to effectively receive interest-free financing from the government.
What they’re saying: McCarthy said Republicans would stand firm in their demands, while Biden has rejected work requirements on Medicaid but otherwise has avoided a definitive response.
- Representative Dusty Johnson of South Dakota, one of the authors of the House debt-limit plan, said the GOP has three red lines: no clean debt increase, no tax increase, and the bill must reduce the deficit.