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Biden, McCarthy Confident as Fight to Pass Debt Deal Revs Up

Biden, McCarthy Confident as Fight to Pass Debt Deal Revs Up
President Joe Biden gives a thumbs up on the South Lawn of the White House in Washington, DC, on May 28. Photographer: Yuri Gripas/Abaca/Bloomberg

President Joe Biden and House Speaker Kevin McCarthy expressed confidence that their debt-ceiling deal will pass Congress, as party leaders revved up a campaign to ratify the agreement in time to avert a catastrophic US default.

Biden cabinet members and senior White House staff already had made individual lobbying calls to at least 60 House Democrats by early Monday morning to press them for votes in favor of approval, a Democratic official said.

“The agreement prevents the worst possible crisis,” Biden told reporters at the White House on Sunday after finishing his deal with McCarthy, calling it a bipartisan compromise.

“No one got everything they want,” he added. “But that’s the responsibility of governing. I strongly urge both chambers to pass that agreement.”

Biden and McCarthy sealed a tentative deal in a 90-minute phone call late Saturday, clearing the way for a push to shepherd the agreement through Congress — likely over the objections of both liberals and conservatives  — before the US government runs out of borrowing capacity in about a week.

Read More on the Debt Ceiling:

The bill sets the course for federal spending through 2024 and will suspend the debt ceiling until Jan. 1, 2025, likely putting off another fight over federal borrowing authority until the middle of that year. In exchange for Republican votes for the suspension, Democrats agreed to cap federal spending for the next two years.

US stock index futures advanced Monday, while the dollar erased modest losses to trade little changed. European government bonds edged higher in thin trading, with much of the region out for a public holiday.

Republican presidential candidate Ron DeSantis went on “Fox & Friends” Monday morning to criticize the deal. “Our country will still be careening toward bankruptcy,” dismissing the compromise for permitting “a massive amount of spending.”

But McCarthy said Sunday that he expects a majority of Republicans to vote for the emerging bill, defending it is as a “transformational” move to rein in federal spending even though “maybe it doesn’t do everything for everyone.”

Biden said he expects McCarthy has the votes to pass the agreement. “I don’t think he would have made the agreement” otherwise, he said.

Senate GOP leader Mitch McConnell also urged Republicans in his chamber to vote for the deal.

Early centrist support came from Representative Steny Hoyer, an influential Democrat who backed the deal despite citing “setbacks” for his party’s agenda. “That’s why I urge my colleagues to join me in supporting this compromise legislation and to bring an end to this needless economic turmoil,” he said in a statement Sunday.

GOP Senator Mitt Romney of Utah, a leader among his party’s moderates, tweeted in a statement Monday that he’ll back the agreement, saying it prevents a default “and subsequent financial meltdown,” while also limiting expenditures.

McCarthy urged lawmakers to reserve judgment until they read the bill. House Republicans issued legislative text shortly after Biden announced the final deal, giving representatives the promised 72 hours to read it before voting as early as Wednesday.

Negotiators from both parties plan to brief their members on the deal in separate calls.

McCarthy rejected as “crazy” a scenario in which the House fails to pass the measure, claiming 95% of his party’s lawmakers are “excited” by the deal. He acknowledged the agreement is likely to face some opposition from Republicans.

“We know anytime we sit and negotiate with two parties, that you got to work with both sides of the aisle. So it’s not 100% of what everybody wants, but when you look, the country is going to be stronger,” McCarthy told reporters at the US Capitol on Sunday morning.

Asked if he was worried about a possible effort by hard-line conservative lawmakers to oust him from the speaker’s chair, McCarthy responded: “Not at all.”

Read more: Traders Ready to Embrace Riskier Assets After Debt-Cap Deal

But Representative Jim Clyburn, a South Carolina Democrat and longtime ally of Biden, struck a more pragmatic tone in a telephone interview Sunday.

“The easy part, in my opinion, is getting agreement. The hard part comes, is getting to 218 votes in the House, and 51 votes in the Senate,” Clyburn said.  “You got some sniping coming from the extreme right wing, some concern being expressed on your left flank.”

Arguing for the merits of the deal, McCarthy cited provisions clawing back previously approved spending, calling them “the largest rescission in American history.” He also highlighted increased work requirements for federal food aid.

A White House official said that Biden’s team doesn’t expect the agreement to reduce health-insurance coverage or raise poverty. Republicans had sought much more dramatic restrictions for federal welfare programs.

The bill creates an $886 billion cap on security spending and a $704 billion cap on non-security domestic spending for fiscal 2024. Those would rise to $895 billion and $711 billion respectively in fiscal 2025.

The deal cuts the Internal Revenue Service’s budget by $1.4 billion this year, meaning the agency will have to cease an expansion of its workforce, McCarthy said. The IRS faces a $20 billion cut over the next 10 years, but that’s far less than the $80 billion cut many GOP lawmakers had sought.

The bill includes dozens of other claw-backs of federal spending, known as rescissions, including for Covid-related programs, migrant and refugee assistance and childcare and housing aid.

While the agreement would not affect the Biden administration’s student-loan forgiveness plan, which is being litigated in the courts, it would end the pandemic-era moratorium on repayments.

“The pause is gone within 60 days of this being signed,” McCarthy told “Fox News Sunday.”

Debt Limit Votes Become More Partisan | To pass a bill, House Speaker Kevin McCarthy will need both Republican and Democratic votes

Representative Garret Graves, one of the Republican negotiators, said the deal would also streamline permitting for energy projects — although a complete overhaul of the 54-year-old National Environmental Policy Act would be dealt with separately. The debt deal specifically expedites completion of the Mountain Valley Pipeline, a gas pipeline from West Virginia to Virginia that’s been stalled over permitting fights.

Read more: Manchin Gets Mountain Valley Pipeline Deal Into Debt Bill

There’s little margin for error or delay. Treasury Secretary Janet Yellen warned Friday that the debt-limit must be extended by June 5 to avoid default.

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