White House debt ceiling offer would cap spending for 2 years, rescind unspent COVID funds

Washington – The White House has made an offer to House Republicans that would cap discretionary spending for two years at the fiscal year 2023 level and roll back up to $30 billion in unspent COVID-19 relief funds. Loan limitCBS News has learned.

The offer is the latest sign that the two sides may be inching closer to an agreement that would prevent a government default, an unprecedented event that would have far-reaching implications for the global economy. The latest proposal from the White House would extend the debt ceiling by about two years, keeping the issue off the table until after the 2024 election.

House Speaker Kevin McCarthy has insisted he wants to limit spending to 2022 levels, and conservative Republicans Pressure on McCarthy “Holding the line” on spending cuts. House Republicans passed a bill in April to raise the debt ceiling and spending cap to 2022 levels. The White House argues that a two-year cap on spending would cut spending by more than $1 trillion, a view not shared by House Republicans.

Talks between White House and McCarthy representatives continued Friday, with some indications that a deal is in sight. On Thursday morning, McCarthy said negotiators worked “well past midnight” the night before, and said he directed his negotiating team to work “24/7” to reach an agreement.

Permitting reforms and work requirements remains a work in progress for negotiators, according to sources familiar with the negotiations. The two sides were also working to develop a mechanism to encourage Congress to pass all 12 annual appropriations bills to fund the government. If a deal can’t be reached, any short-term continuing resolution would be subject to a different spending cap, the source said.

Treasury Secretary Janet Yellen has warned that the U.S. could default and be unable to pay its bills as early as June, and that any negotiated deal would take some time to pass both houses of Congress. Lawmakers are leaving Washington, D.C., for the Memorial Day break, though congressional leaders have warned them to be prepared to return on short notice.

President Biden reiterated Thursday afternoon that he and McCarthy were at least on the same page about avoiding default.

“Speaker McCarthy and I have had several productive conversations, and our staff continues to meet as we speak, in fact, and they are making progress,” the president said Thursday afternoon. “I have made clear time and time again that defaulting on our national debt is not an option. The American people deserve to know that their Social Security payments will be there, that veterans’ hospitals will remain open, and that the economic Progress will be made and we will continue to build it again. Default puts them all at risk. Congressional leaders understand that, and they’ve all agreed — there will be no default.”

Katherine Watson and Rebecca Kaplan contributed to this report.

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