YELLEN: JUNE 1 IS A ‘HARD DEADLINE’ — On NBC’s “Meet the Press” this morning, Treasury Secretary JANET YELLEN underscored the urgency of debt limit talks, reasserting that the so-called “X date” when the government can no longer pay its bills is likely June 1. “I think that that's a hard deadline,” Yellen said. “It's hard to be absolutely certain about this, but my assessment is that the odds of reaching June 15th while being able to pay all of our bills is quite low.” MOOD MUSIC — “Small businesses are beginning to panic about a government default,” by WaPo’s Abha Bhattarai … “Even Flirting With U.S. Default Takes Economic Toll,” by NYT’s Lydia DePillis and Ben Casselman INSIDE THE LATEST DEBT CEILING TALKS — With the nation charging ever closer to the brink of default and the X date less than two weeks away, congressional Republicans are expanding their demands to raise the debt ceiling, according to a source familiar with the talks who emailed us an update at about 1 a.m. Congressional Republicans have not only rejected a new White House offer to essentially freeze domestic spending at FY2023 levels, they’re now demanding work requirements for SNAP recipients that are more rigid than those they originally proposed. They’re also insisting on adding new immigration provisions from the GOP’s recently passed border bill — which, mind you, Republicans didn’t include in their own debt ceiling bill. (More on both in a second … ) The GOP’s dug-in position comes at the end of a week when both President JOE BIDEN and Speaker KEVIN McCARTHY acknowledged that a budget deal would have to be bipartisan. Vote-counters on the Hill believe that any eventual deal will need the backing of about 100 House Democrats since a number of conservatives will never support a compromise. Yet given what Republican negotiators are now countering, they’re far from that number. The White House is not happy with the new GOP demands. This morning, Biden told reporters that the GOP needs to move off their “extreme positions.” Added the aforementioned source: “Just days after publicly acknowledging that any budget agreement would need the support of both parties, the Speaker’s team has taken a big step backward with a set of extreme partisan demands that doesn’t reflect any movement after days of negotiations and that they know will never pass both Houses of Congress.” McCarthy’s office pushed back on that characterization, calling it “inaccurate” — though they declined to say which part specifically. In an interview today on Fox News’ “Sunday Morning Futures,” the speaker disputed the suggestion that Republicans are moving the goalposts.” “We have never offered something different than we talked about the entire time,” he said, pointing out that the White House, meanwhile, has gone wobbly on whether they would actually accept changes to work requirements. “It seems as though [Biden] wants default more than he wants a deal,” McCarthy said. Meanwhile in Japan, before Biden boarded a plane to return to Washington from the G-7, he said that he intended to call McCarthy to talk. He also appeared to open the door to using the 14th Amendment to unilaterally raise the debt ceiling on his own, sans Congress — though he acknowledged that such an issue may not solve the problem since it could get mired in the courts while the nation defaults. "I think we have the authority,” he said. “The question is: Could it be done and invoked in time?" (Worth flagging: Asked about the 14th Amendment this morning on “Meet the Press,” Yellen was very iffy: “It doesn’t seem like something that could be appropriately used in these circumstances given the legal uncertainty around it.”) THE STEPBACK — It’s worth taking a moment to consider and weigh what each side has done to move toward the center in a bid to actually strike a deal. The Democrats have: 1. All but publicly acknowledged that a “clean” debt ceiling increase — which they originally insisted on — is not going to happen (as evidenced by even engaging in negotiations with Republicans). 2. Signaled a willingness to claw back unspent Covid funding and consider overhauling permitting reform, two big asks by Republicans. 3. Opened the door to spending cuts, a central plank of Republicans’ House-passed bill. According to the nonpartisan Congressional Budget Office, the spending freeze proposed by the White House this weekend would result in a nearly $90 billion cut in spending next year while shaving off about $1 trillion over a decade by slowing the growth of agency budgets. 4. (Biden has) expressed a willingness to consider work requirements for certain safety-net programs — something the GOP has long pined for and couldn’t pass even when they controlled both chambers of Congress under DONALD TRUMP. (Though Biden also suggested he’d reject these if Republicans insist on protecting “wealthy tax cheats.”) Meanwhile, the Republicans: 1. Continue to push for a spending caps deal three times longer than any such agreement struck in recent budget deals surrounding the debt ceiling. (While the 2011 debt deal produced a 10-year cuts regime, those caps were subsequently revised every two years.) 2. Have not pressed forward on two big demands of the House GOP bill, which sought to undo provisions of the Inflation Reduction Act and student debt relief enacted by the Biden administration. 3. Insist that Democrats actually increase Pentagon, border and veterans-related spending — necessitating even steeper cuts to non-defense programs. 4. Have scorned Democrats’ demands to close tax loopholes and hike levies that benefit the wealthy and big corporations. 5. Are doubling down on work requirements and have since added additional changes to SNAP that would restrict states’ abilities to seek waivers from work requirements in areas with high unemployment. (Of note, per the source: “When the Trump Administration put forward a similar policy through rulemaking, it estimated that about 700,000 people would lose food assistance.”) 6. Are demanding new immigration provisions from the GOP’s recently passed border bill, which not a single House Democrat voted for. 7. Have rejected a White House offer to reduce spending via prescription drug reforms. WORTH NOTING: The Biden White House’s concessions have already infuriated some in their own allies on the Hill. Congressional Democrats worry about the effect of spending cuts on teachers, Meals on Wheels, law enforcement, cancer research and, especially, poorer Americans who depend on SNAP, Medicaid and TANF. The White House appears to be waiting for the GOP to let go of some of its demands, which will of course anger some conservatives, but which the administration argues is nonetheless necessary to broker a deal and avoid a catastrophic default. More debt ceiling reads: POLITICO: “The debt ceiling standoff is giving a stress test to Biden’s presidential playbook,” by Jonathan Lemire AP: “Biden: GOP must move off ‘extreme’ positions, no debt limit deal solely on its ‘partisan terms,’” by Zeke Miller and Josh Boak WSJ: “Debt-Ceiling Talks Devolve Into Finger Pointing and Frustration as Deal Remains Elusive,” by Natalie Andrews and Andrew Restuccia NYT: “Even Flirting With U.S. Default Takes Economic Toll,” by Lydia DePillis and Ben Casselman WaPo: “Biden ends his G-7 visit the way it began: Struggling with the debt ceiling,” by WaPo’s Tyler Pager and Matt Viser
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