Jun 11, 2023

Length of spending caps, debt limit hike mulled as talks begin

The White House and congressional leaders are discussing the duration of appropriations caps and a debt limit raise, as staff talks get underway in advance of the next principals meeting on Friday.

A two-year appropriations deal is under consideration, according to sources familiar with the talks, along the lines of three separate laws since 2015 that were paired with suspensions of the debt limit.

The White House and top Democrats are pushing for two years of debt limit breathing room, as in the 2019 deal cut with former President Donald Trump. That law contained two years of spending caps, which Speaker Kevin McCarthy pointed out as far back as January.

Such an arrangement would, in theory, remove the threat of fiscal cliffs facing lawmakers and the economy until after the 2024 elections.

But it was clear Republicans aren't yet on board with a two-year deal, in part because it lessens their leverage going into next year's campaign. And Democrats still don't want to link spending limits with the debt ceiling, preferring to deal with the two issues on separate tracks.

The House GOP bill, which that chamber passed in a squeaker vote last month, has 10 years of tight spending caps coupled with a $1.5 trillion debt limit increase or suspension to March 31, 2024, whichever comes first.

Rep. Garret Graves, R-La., whom McCarthy tapped to broker talks last month on the GOP bill, told reporters Wednesday that a single year of spending caps could be acceptable under the right conditions.

"I think that if the White House could show that they're bending the curve, that they have an earnest intent to begin lowering the amount of spending to begin putting us on a sustainable financial trajectory, that we can do one year," Graves said. "I am more than happy, and I think the speaker of the House would be more than happy, to come back and have the same debate next year."

The amount of spending cuts required, however, would depend partly on the length of a debt limit extension, he said. President Joe Biden said Tuesday at a news conference that he wanted to extend the government's borrowing capacity for "more than a year" and that there has been discussion of a two-year extension.

"If they want to do a two-year deal, that's going to cost them more, meaning that we're going to have to have more limiting on spending," Graves said. "We're going to have to have more savings and more growth."

Later in the day, House Minority Leader Hakeem Jeffries said staff from both sides held a "long" and "potentially fruitful" meeting on Wednesday, though he couldn't elaborate because he hadn't gotten a full readout yet.

Other proposals in the House bill, such as recouping unspent COVID-19 relief funds and streamlining the energy project approval process, have some bipartisan support.

Senate Energy and Natural Resources Chairman Joe Manchin III, D-W.Va., who's been pushing for a debt limit negotiation, said an energy infrastructure permitting deal would get done at some point. But he wasn't wedded to it happening this month as part of a debt limit bill. The issue came up at Senate Democrats' lunch on Wednesday, Benjamin L. Cardin, D-Md., said., though not in the context of the debt limit.

Graves said rescinding coronavirus funding, faster energy permitting, and work requirements for certain federal safety net programs could all be ripe for a bipartisan deal. "These are all things that are rational that have had bipartisan support in the past," he said.

Some Democrats facing potentially tough races next year have begun to get more vocal in support of a bipartisan negotiation on the debt limit.

"With just under three weeks to go, we should say the quiet part out loud that people whisper around the halls of Congress: this is headed towards a negotiation," freshman Rep. Jared Moskowitz, D-Fla., said in a statement Tuesday night. "We should be talking about — extending the debt ceiling until after the election, reclaiming unused covid funds, and discussions about discretionary spending without touching Social Security, Medicare, or Defense."

Biden won Moskowitz’ district by 13 points in 2020, but the freshman Democrat won the open seat last year by just 5 points and he's a top target of House Republicans’ campaign arm in the 2024 races. Other Democrats who’ve urged the two parties to cut a deal include Marie Gluesenkamp Perez of Washington, Jared Golden of Maine and Mary Peltola of Alaska, all of whom represent districts Biden lost in 2020.

Still, it's become clear, including to GOP leaders, that a bipartisan deal wouldn't contain everything conservative House lawmakers have sought. A Republican aide familiar with the discussions said leadership has started "laying the groundwork for a final deal that will be disappointing to some on the right."

While talks began at the staff level this week, it's not yet clear the two parties agree about what's on the table. Senate Majority Leader Charles E. Schumer, who for months has pushed for a "clean" debt limit increase, said again Wednesday that spending negotiations would not be part of a debt limit discussion.

"Our staffs will be having conversations beginning today that are part of the regular appropriations process," Schumer said. "Speaker McCarthy will have plenty of say over the budget in the appropriations process. That is the proper place to have these debates, not during conversations about the full faith and credit of the United States."

Republicans said again that a clean debt limit bill was a nonstarter. Senate Minority Leader Mitch McConnell said seven of the last 10 debt limit increases were paired with "bipartisan deals on spending levels" and that such deals are necessary at a time of divided government.

House Financial Services Chairman Patrick T. McHenry, R-N.C., met with McCarthy and other top Republicans on Wednesday on the debt ceiling. He said after the meeting that the two sides haven't yet agreed either on substance or on process, such as whether there are two tracks or one combined bill.

"I think we’re still at the structural question, which is the White House needs to have an offering. We put out our offering, we passed a plan, we raised the debt ceiling," McHenry said. "I think the process question is the last question, and they’re putting the cart before the horse. We don't actually have a cart yet; we have nothing of substance to take across. And so when they’re talking procedural avenues, they’re arguing with themselves."

Biden has said repeatedly he has offered a plan: his fiscal 2024 budget request, which relies on tax increases to reduce deficits while proposing to increase discretionary spending by 5 percent next year.

That represents a more than $200 billion difference with House Republicans, however, who want to cut agency budgets on average by 8 percent while increasing defense and veterans spending — meaning other programs would face steeper cuts.

Still, top Democrats say a deal can be reached: but only if decoupled from the debt limit.

"I don't believe in reaching an agreement when someone has a gun pointing to my head and a gun pointed to the head of the U.S. and global economy. There's no reason though, why we can't have those appropriations conversations now," House Budget ranking member Brendan F. Boyle, D-Pa., said. "Even given the normal calendar we would have to be having them anyway just to agree on what the topline figure will be. That would be happening normally, regardless of the debt ceiling ‘x date’."

Lindsey McPherson, Paul M. Krawzak and David Jordan contributed to this report.