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US: Parties ramp up pressure as debt default looms

May 23, 2023

(CNN) — Last week, the Congressional Progressive Caucus posed a formal ask to its members: were there any proposals they could accept included in the list of GOP demands in exchange for raising the debt ceiling?

The overwhelming consensus: The GOP demands were too much to stomach.

Instead, they wanted President Joe Biden to engage in legally murky waters to employ the 14th Amendment and unilaterally avoid default, according to two sources familiar with the matter. Rep. Pramila Jayapal, a Washington Democrat and the CPC chairwoman, promptly informed the White House.

And then she publicly offered this warning.

“I think there would be a huge backlash from our entire House Democratic Caucus, certainly the progressives, but also in the streets,” Jayapal told CNN of a potential “bad deal.”

On the other end of the ideological spectrum, the hard-right House Freedom Caucus took an official position calling for an end to bipartisan talks and made clear they can’t accept anything less than the conservative debt ceiling proposal that Republicans already passed in the House.

Members on the right are also warning House Speaker Kevin McCarthy of backlash if he agrees to a deal that is opposed by a majority of House Republicans and has to rely on Democrats to get it over the finish line.

“Yes,” said Rep. Byron Donalds, a Florida Republican and member of the House Freedom Caucus, when asked if it would be a problem if more than half of the 222 House Republicans oppose any bipartisan deal reached with the White House.

“If the majority of the majority is not happy, would Nancy Pelosi ever do that? Nope,” Donalds said, referring to the former Democratic speaker.

The growing pressure from the left and right flanks to not cave in the high-stakes debt ceiling negotiations – or in some cases, not cut a deal at all – underscores the immense challenges that Biden and McCarthy are facing as they try to hammer out a complicated fiscal agreement that enough members in both their parties could begrudgingly support in just a matter of days.

For McCarthy, his speakership is on the line in how he handles the debt ceiling crisis, though conservatives are giving him high marks for now. That dynamic is driving McCarthy’s push for strict spending cuts and his insistence that members get 72 hours to read the bill before a floor vote – both promises he made during his drawn-out battle for the speaker’s gavel.

But hardliners want even more time than that. Some on the far-right are now even asserting that June 1 is not a real default deadline, urging relevant committee chairs to haul in Treasury Secretary Janet Yellen for questioning under oath about her assessment that the nation’s $31.4 trillion borrowing limit must be raised by then to avoid the prospects of economic calamity.

“I don’t believe that the first of the month is a real deadline,” Republican Rep. Matt Gaetz of Florida told CNN. “I don’t understand why we’re not making Janet Yellen show her work.”

“Everyone knows that’s false,” said GOP Rep. Ralph Norman of South Carolina, a member of the House Freedom Caucus, of Yellen’s projection.

McCarthy is trying to relay to his members that he isn’t folding to the White House’s pressure campaign, saying on Tuesday he’s only willing to make one concession in exchange for GOP demands for spending cuts and ways to pare back social safety net programs.

“We are going to raise the debt ceiling,” he told CNN when asked what he’d give to the White House in their deal-cutting.

Biden, who repeatedly insisted he wouldn’t negotiate on the debt ceiling only to do so in the 11th-hour, is now contending with an increasingly restive Democratic caucus uneasy about what type of deal he might cut.

Even House Minority Leader Hakeem Jeffries took to the Capitol steps on Monday in a hastily arranged news conference to blast the talks as moving in the “wrong direction” – a potentially troubling sign, given he will need to supply a healthy number of Democratic votes to get any bipartisan deal across the finish line.

“They’ve rejected the fact that President Biden is willing to consider freezing spending. It will reduce the deficit by a trillion dollars. This is what the extreme MAGA Republicans say that they want. They rejected” it, the New York Democrat said.

For now, the chief negotiators are expressing cautious optimism that they’ll be able to find a compromise in time to avoid a cataclysmic default. But they have also acknowledged that coming to an agreement among themselves is only half the battle – they still will need to sell any deal to their respective parties, an admittedly tall order.

“We have to be in a position where we can sell it to our constituencies,” Biden told reporters during his Monday meeting with McCarthy at the White House. “We’re pretty well divided in the House, almost down the middle, and it’s not that different in the Senate, so we’ve got to get something we can sell to both sides.”

McCarthy’s challenge: Winning a majority of Republicans

The biggest sticking points in the negotiations are GOP demands for spending cuts and tougher work requirements for government assistance programs, which have given Democrats serious heartburn.

When Biden started to seem more open to work requirements for programs like temporary assistance for needy families in his public comments, a flurry of calls from progressives came into the White House, a source familiar with the talks told CNN.

While progressives think the White House cleaned up their position a bit, there is still a lot of fear over that issue, the source added.

“It’s going to be a problem,” New York Rep. Alexandria Ocasio-Cortez said when asked about the potential the White House could cut a deal on spending cuts and work requirements. “We do not legislate through the debt ceiling for this very reason.”

Progressives also formally called on Biden last week to invoke the 14th Amendment, which states the full faith and credit of the United States shall not be questioned, in order to raise the debt ceiling on his own. The White House has said it’s not a workable solution, and while Biden continues to say it’s not on the table given the legal and time constraints, he went notably further over the weekend in suggesting it’s something he could potentially use in the future – a clear nod to progressives.

“I’m looking at the 14th Amendment as to whether or not we have the authority — I think we have the authority,” Biden told reporters at a news conference in Hiroshima, Japan. “The question is, could it be done and invoked in time that it would not be appealed.”

White House officials, however, have since signaled that the president wouldn’t go down that path.

Democrats are not only imploring Biden to resist Republican demands, but to start offering up some Democratic priorities of their own. And in recent days, Biden has been suggesting tax revenues should be on the table – a proposition that Republicans have rejected.

McCarthy also accused the White House on Tuesday of trying to “disrupt” negotiations by bringing up the idea of expanding the number of prescription drugs that Medicare can negotiate prices.

“Trying to throw taxes in, now trying to start talking about Medicare? No. We gotta get it done,” McCarthy told reporters.

Asked if he would only put a bill on the floor that had the support of a majority of Republicans, the speaker didn’t say explicitly, though he expressed confidence in the outcome.

“I firmly believe what we’re negotiating right now, a majority of Republicans will see that it is a right place to put us on a right path,” McCarthy told CNN.

Multiple senior House GOP sources say the speaker has no choice but to ensure he has support from more than half of his conference, otherwise the end product could be viewed as a major capitulation by the speaker.

Republicans, too, have ratcheted up their demands as the negotiations have dragged on. Over the weekend, the GOP included border security provisions in its offer, according to sources familiar with the proposal, despite not including such language in the House Republican debt ceiling plan. The newly injected demands came just days after the conservative Republican Study Committee called on Republican leadership to link the two complicated issues.

“That would be a good idea, wouldn’t it?” said Rep. Harriet Hageman, a Republican from Wyoming.

Rep. Dan Bishop, a North Carolina Republican, added: “It’s something that could be a sweetener, and an important one.”

But in recent days, conservatives’ concerns about the negotiations have only intensified. At a closed-door conference meeting on Tuesday, conservative Rep. Chip Roy of Texas complained about the efforts to seek a compromise with Democrats, according to sources in the room.

“When you say any deal, no, I’m not confident of that,” said Rep. Kevin Hern of Oklahoma, who chairs the Republican Study Committee, when asked if his large bloc of members would support any deal that McCarthy may cut with Democrats.

Further complicating the negotiations is that some lawmakers don’t want to see their party leaders cut any debt ceiling deal with the other side.

“I think the existing fact of unprecedented Republican unity is the most powerful force in this town right now,” Bishop said. “That should be stewarded and protected above all. We must keep the Republican conference together.”

Rep. Scott Perry, the Pennsylvania Republican and leader of the House Freedom Caucus, put it bluntly.

“What we’ll take is what we passed,” Perry said, referring to the House bill that Democrats have blasted as draconian.

Democrats fear they’ve been pushed into a corner

Many Democrats still think they should only entertain the idea of a clean debt ceiling hike, noting that both parties suspended the nation’s borrowing limit three times under former President Donald Trump with little outcry from Republicans.

Indeed, House Democrats are now pushing harder on a discharge petition, a long-shot procedural tool that would bypass McCarthy and bring a clean debt ceiling raise to the floor, with Democratic leadership reaching out to select Republicans they feel they can peel off. The petition needs 218 signatures to be brought to the floor, but so far, Republicans have shown zero interest in the idea.

“I’m not interested in that,” said Rep. David Joyce, a moderate Republican from Ohio.

Democrats have long feared that the debt ceiling was going to become an issue if Republicans took control of the House, and progressives had been pushing their Democratic leaders to address the debt crisis when they still had the majority. Jayapal even raised the issue with Pelosi when she was speaker, a source familiar with the talks told CNN.

Democratic Rep. Jamaal Bowman, a New York member of the Progressive Caucus, told CNN that he feels House Republicans have backed Democrats into a corner, and Democrats need to better educate the public about the situation. Bowman said even Pelosi raised in a meeting last week that corporations should be doing a better job of helping to educate why a default would be catastrophic for the American people and the economy, which he agreed with.

“I think many of us are already alienated a little bit, even me included, because I think we were like sort of forced into a corner of negotiation because the Republicans have been so reckless with their rhetoric around being OK with default and needing to deal with unnecessary spending,” Bowman said.

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