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Helmholtz Watson

GOP, Democrats Draw Red Lines Ahead of Biden Debt-Ceiling Meeting

WASHINGTON—Negotiators appeared far from an agreement to raise the debt ceiling and trim spending ahead of a Tuesday meeting between President Biden and top lawmakers, as progressive Democrats signaled opposition to several proposals and Republicans demanded new work requirements for beneficiaries of government programs.

White House and congressional staff have been meeting behind closed doors for several days, and people briefed on the discussions said they were making incremental progress. But Tuesday’s meeting between Mr. Biden and the congressional leaders will be a significant test of whether the staff-level work can win broader buy-in, amid mounting signs that progressive Democrats are opposed to some of the proposals under discussion.

On Monday, the Treasury Department reiterated that the U.S. could face a default as soon as June 1 if Congress doesn’t raise the debt ceiling, echoing its previous estimate.

Democrats and Republicans have sometimes offered different assessments on the state of the negotiations. Mr. Biden has said he is optimistic and believes lawmakers of both parties were committed to finding a deal, while Republican leaders have tempered hopes of an imminent agreement.

House Speaker Kevin McCarthy (R., Calif.) said Tuesday that work requirements must be included in the negotiations. “The idea that they want to put us into default because they will not work with us on that is ludicrous to me,” Mr. McCarthy told reporters. In a closed-door meeting with Republicans on Tuesday, he told his conference to hold together for the next 16 days, according to a person in the room.

Republican lawmakers and Mr. Biden are at an impasse over raising the debt limit. Democrats have sought a debt-ceiling increase with no conditions attached, while Republicans want to use it as leverage to cut government spending. If Congress doesn’t act and the government is unable to borrow to help pay all of its bills, it might have to suspend certain pension payments, withhold or cut the pay of soldiers and federal workers, or delay interest payments, which would constitute a default.

Washington has a little more than two weeks to complete a deal. The House and Senate are only in session at the same time for four days this week. Then both chambers will stagger their Memorial Day recess, making convening to vote on a final deal difficult. Meanwhile, Mr. Biden is scheduled to depart on Wednesday for a roughly weeklong international trip.

“We’ve got 16 more days to go,” Mr. McCarthy said. “I don’t think I would spend eight days somewhere out of the country.”

More than 100 top executives of companies including Pfizer, Goldman Sachs and Macy’s signed on to a letter calling for leaders to quickly resolve the debt standoff and avert “potentially disastrous consequences.”

The tense negotiations echo a 2011 standoff between former President Barack Obama and Republicans. Mr. Biden has pointed to the 2011 episode as a central reason why he has sought to avoid negotiating with Republicans over raising the debt ceiling.

Staff-level talks continued Monday, according to aides, and have centered on several subjects on which Democrats and Republicans might be able to find agreement. Among them: clawing back unspent Covid-19 funds, speeding up the permitting process for energy projects, capping spending and imposing stricter work requirements on some government programs.

But negotiators are divided on the details.

Lawmakers are also haggling over how long or for how much to raise the debt ceiling. Republicans set the date for March 2024 in the bill they passed in April, while Democrats want to delay it until after the presidential election.

“I don’t see how we kick the can down the road for anything less than two years,” Democratic Caucus Chair Pete Aguilar (D., Calif.) said. “We’ve been down this road before. There’s no sense in having anything tied to an early spring or 2024 date.”

Republicans want to see a 10-year spending-caps agreement, while the White House has signaled openness to a two-year deal, according to people familiar with the matter.

House Republicans say because they will be in the majority for the next two years, they will already be part of spending conversations this year and the next, which is why they want the spending caps deal to extend beyond 2024. In the negotiations, the White House has pushed back on Republican proposals to undo parts of the climate, healthcare and tax package Democrats passed last year, and has argued for raising the debt ceiling for two years, aides said.

Some Democrats and outside progressive advocates say they are strongly opposed to any agreement that includes a cap on spending, noting that people rely on many of the programs that could see cuts under such a move.

Sen. Elizabeth Warren (D., Mass.) said progressive lawmakers have raised concerns to the White House about spending caps. “They are like a self-inflicted wound,” she said.

While lawmakers in both parties have signaled support for changes to the system of energy-project permitting, they have differing visions on what that might include, and many Democrats are worried about embracing provisions that will make it easier to build fossil-fuel-related projects.

Some aides said it wasn’t realistic to attach a comprehensive permitting plan to a spending agreement, though negotiators could secure a commitment to take up the issue separately or tackle a handful of high-level permitting issues in any final deal.

Permitting is an issue that both Democrats and Republicans “should be able to reach consensus on,” said Rep. Garret Graves (R., La.), who has been working closely with Mr. McCarthy.

Republicans are pushing for stricter work requirements for government programs, which many Democrats including Mr. Biden oppose. House Republicans in the bill they passed in April implemented work requirements for Medicaid recipients, requiring able-bodied people without children or dependents who are ages 19 to 55 to work 20 hours a week to qualify for healthcare benefits, or do community service.

“We have made it clear…that if [Democrats] give on these core Democratic values, and I hope they don’t, there will be a huge backlash,” said Rep. Pramila Jayapal (D., Wash.), the chairwoman of the Congressional Progressive Caucus.

For food stamps, under prepandemic rules resuming in all states by July, able-bodied, low-income adults between the ages of 18 and 49 and without dependents can receive benefits for no more than three months within a three-year period, unless they are working or enrolled in a work program. The GOP legislation would raise that age to 55 and curb states’ abilities to waive those time limits.

The Congressional Budget Office predicted that if the GOP bill became law, about 600,000 Americans would lose health insurance and about 275,000 Americans a month would lose access to food stamps.