Biden says debt default deal ‘very close’ while deadline now set at June 5

The later “X-date,” laid out in a letter from Treasury Secretary Janet Yellen, set the risk of a devastating default four days later than an earlier estimate. It came as Americans and the world uneasily watched the negotiating brinkmanship that could throw the U.S. economy into chaos and sap world confidence in the nation’s leadership.

Biden and Republican House Speaker Kevin McCarthy seemed to be narrowing on a two-year budget-slashing deal that would also extend the debt limit into 2025 past the next presidential election. After frustrating rounds of closed-door talks, a compromise had appeared to be nearing on Friday. But many of the hard-right Trump-aligned Republicans in Congress have long been skeptical of Treasury’s projections, and they are pressing McCarthy to hold out.

While the contours of the deal have been taking shape to cut spending for 2024 and impose a 1% cap on spending growth for 2025, the two sides remain stuck on various provisions. The debt ceiling, now at $31 trillion, would be lifted for two years to pay the nation’s incurred bills. Weeks of negotiations between Republicans and the White House have failed to produce a deal - in part because the Biden administration resisted negotiating with McCarthy over the debt limit, arguing that the country’s full faith and credit should not be used as leverage to extract other partisan priorities.One idea is to set the topline budget numbers but then add a “snap-back” provision to enforce cuts if Congress is unable during its annual appropriations process to meet the new goals.

The teams are also eyeing a proposal to boost energy transmission line development from Sen. John Hickenlooper, D-Colo., to facilitate the buildout of an interregional power grid.

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