(CNN) — House Speaker Kevin McCarthy appears set to send members home after votes on Thursday, signaling that debt negotiations with the White House will continue as the risk of a first-ever default grows.
While the speaker urged lawmakers to stay close to the nation’s capital over Memorial Day weekend, his top deputy, House Majority Leader Steve Scalise, announced that the House will recess following votes on Thursday as negotiators continue to work on a debt ceiling deal.
“Following tomorrow’s votes, if some new agreement is reached between President Biden and Speaker McCarthy, members will receive 24 hours’ notice in the event we need to return to Washington for any additional votes, either over the weekend or next week,” he said.
Negotiators are trying to make progress on a handful of outstanding issues – in addition to cutting federal spending, which remains a major sticking point. Two sources familiar with the matter said the White House is weighing the GOP demands in exchange for winning the lone concession offered by McCarthy: raising the debt limit.
The two sides have agreed to rescind some Covid-19 relief aid, an issue first proposed by House Republicans, according to multiple sources.
Hours of meetings on Wednesday moved negotiations in a positive direction, McCarthy told reporters, but each day that passes without a bipartisan deal to raise the debt ceiling brings the nation closer to default – which could be catastrophic for the global economy and have financial effects on countless Americans.
McCarthy said Thursday morning that negotiators worked past midnight and are inching closer to a potential deal. He reaffirmed that he does believe the June 1 deadline is a real deadline despite some claims from conservatives that the Treasury estimate is off.
“I thought we made some progress. There’s still some outstanding issues and I’ve directed our teams to work 24/7 to try to solve this problem,” McCarthy said.
Warning signs are beginning to pop up: Fitch Ratings placed the top-ranked US sovereign credit rating on rating watch negative Wednesday, reflecting the uncertainty surrounding the current debt ceiling debate and the possibility of a first-ever default. The agency, one of the top three credit rating agencies along with Moody’s and S&P, placed the US “AAA” on “rating watch negative,” signaling that it could downgrade US debt if lawmakers do not agree on a bill that raises US Treasury’s debt limit.
“The Rating Watch Negative reflects increased political partisanship that is hindering reaching a resolution to raise or suspend the debt limit despite the fast-approaching x date (when the U.S. Treasury exhausts its cash position and capacity for extraordinary measures without incurring new debt),” the company said in a statement, though it said it believes a resolution will be found in time.
Treasury Secretary Janet Yellen has repeatedly said it’s likely that the US Treasury will not be able to pay all of its bills in full and on time as soon as June 1, which is now just a week away. The prospects for enacting a debt limit hike by then are grim, senior sources told CNN, even as negotiators signal they’re starting to make progress on a deal.
McCarthy has repeatedly warned that the White House and House GOP must reach a deal this week to avoid default, and he has said raising the debt ceiling is the only concession he will make.
Work requirements for food stamp recipients are still the subject of intense negotiations, as is expediting the environmental review process for energy projects and removing barriers to building large-scale transmission lines to help with the electrical grid. Spending levels have not been agreed to yet. But the items under consideration give a window into how the talks are shaping up behind the scenes.
Negotiators for the White House and McCarthy have met daily, most recently spending several hours on Wednesday afternoon at the Eisenhower Executive Office Building of the White House complex, after spending much of their recent negotiations at the Capitol. White House press secretary Karine Jean-Pierre told reporters not to “read too much into the change of venue. McCarthy and President Joe Biden last met in-person on Monday.
McCarthy has maintained that there’s a “significant gap” between both sides in negotiations, signaling that more talks between the two parties will continue while the House is scheduled to be in recess all next week following Memorial Day, though – as Scalise said – lawmakers would be called back to Washington if a deal is reached.
In a meeting earlier this week, McCarthy told members of the Republican conference that they should prepare to return to their districts if a deal isn’t reached by the White House and Republican negotiators by Memorial Day weekend. Members can always be called back, but Republican Study Committee Chairman Kevin Hern, who was in the meeting, told reporters that this is a deal that has to be reached between a few key people.
“The negotiations are with the speaker and his team and the White House and their team. And so, the rest of us being here, just waiting around, doesn’t do any good for anyone,” Hern said.
If Biden and McCarthy eventually come to a consensus, they will next face the consideration of members of Congress in both chambers. Members of both parties have expressed concerns about possible concessions.
There are also legislative processes that come into consideration.
North Carolina GOP Rep. Patrick McHenry, one of McCarthy’s key negotiators, has said the House will need 24-48 hours to write the legislative text, then three days to let members review it before they vote. Then it needs to go to the Senate, where Senate Majority Leader Chuck Schumer has said he can accelerate the timeline – but only by so much.
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