May 24, 2023 Latest on debt ceiling negotiations

The prospects for enacting a debt limit hike by June 1 are grim, senior Republican sources tell CNN, even as negotiators signal they’re starting to make progress on a deal. 

As of Wednesday evening, the two sides had yet to reach an agreement on key sticking points, sources said. Even if they do, they’ll still need at least a day to turn it into bill text and then another 72 hours to give members time to read the bill before a floor vote in the House. Then it still needs to go through the Senate, where any single senator can hold things up.

That timeline makes it exceedingly unlikely that they can get a bill to President Biden’s desk by June 1 — the date the Treasury Department previously has said the country could default. Still, a number of Republicans have expressed doubt that next Thursday is the hard deadline.

That reality has started to set in among lawmakers, with the House Majority Leader’s office informing members on Wednesday that they can return home for the Memorial Day weekend after votes tomorrow, although they’ll be given 24 hours' notice if they need to return. 

GOP leaders continue to insist a short-term patch is off the table. Regardless, that option would also require some time to get through both chambers.

Fitch Ratings placed the top-ranked United States 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.

However, Fitch added that it still believed there will be a resolution before the “X-date.”

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House Democrats indicated that they are concerned that the White House will give up too much in their negotiations with House Republicans, and acknowledged that the House GOP is winning the messaging war.

“The Speaker has decided to make this really a public relations effort, and really turning it into a political process. And so do we sacrifice something in the short term as a result? We sure do," Rep. Dan Kildee said.

Democrats need to "continue to just press the most reasonable approach that we can take and try to get to yes,” he said.

Rep. Dean Phillips wouldn’t say how he believes the White House has handled the talks but did say he is disappointed that it took so long for the White House to begin negotiating because they lost a chance to fight for key Democratic priorities.

Rep. Alexandria Ocasio-Cortez said that she hopes the White House does not yield to House Republicans on spending cuts. The New York lawmaker said she thinks the "White House is doing the best they can" and criticized Republicans.

 "When you have a party that is being reckless, that is refusing actually to negotiate and engage in what they call themselves hostage taking, it’s really about how we figure out how to break through that block of irrationality," she said.

If the US is not able to pay all its bills for the first time ever, senior citizens could be impacted quickly.

Unless President Joe Biden and House Republicans hammer out a deal to address the debt ceiling soon, the Treasury Department may not have enough funds to fully satisfy all of the nation’s obligations as soon as June 1.

The first batch of Social Security payments – roughly $25 billion’s worth – are scheduled to be sent out on June 2. They mainly go to many of the oldest and most vulnerable of the roughly 66 million retirees, disabled workers and others in the entitlement program, those who started receiving their checks before May 1997.

Payments to more recent enrollees are set to go out on June 14, June 21 and June 28, depending on the day of the month one was born. The amounts are also about $25 billion each week.

But if the debt ceiling impasse is not resolved, those benefits could be delayed, along with paychecks to federal workers and the military, payments to Medicare providers, and federal grants to states and municipalities for Medicaid, highways, education and more.

Many senior citizens are already growing worried, especially in the past week or so as the deadline grows closer, advocates say.

Almost two-thirds of beneficiaries rely on Social Security for half of their income, and for 40% of recipients, the payments constitute at least 90% of their income, according to the National Committee to Preserve Social Security and Medicare. The average benefit for retired workers is $1,827 a month in 2023.

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House Speaker Kevin McCarthy returned to the Capitol after meetings on the debt ceiling Wednesday.

He got back shortly after 6 p.m. ET, telling reporters he's "not sure" if there will be another meeting with White House negotiators on the debt ceiling tonight. 

"We’re gonna have a discussion here in a moment and I’ll find out," he said as he entered his office.

The House will recess following votes on Thursday as negotiators continue to work on a debt ceiling deal, House Majority Leader Steve Scalise said.

Scalise faced jeers and boos when he began his remarks by saying “As we all know, the House has already voted to address the debt ceiling” and castigating the Senate for not taking up their bill or being in session this week.

The House currently has a scheduled recess next week.

House Speaker Kevin McCarthy said that the meeting between top GOP and senior White House negotiators on Wednesday moved in a positive direction — but indicated that there are still substantial issues to resolve.

Asked if the White House moved closer to GOP demands on spending cuts, McCarthy told CNN: “There was a number of issues that are out there that we’ve been working on, I think being able to find some ways that we can probably get to fruition on a couple of these, there’s still a number of these out there.”

McCarthy would not provide specific details on sticking points – but said that he is not budging from his demand to cut spending and that work requirements for social safety net programs are on the table.

He reiterated that the only concession he is willing to give is to raise the national debt ceiling.

McCarthy's comments suggest that the White House may be willing to give in on GOP demands.

“What the White House has asked us for is to raise the debt ceiling,” McCarthy said.

He still believes that there is still enough time to reach an agreement before the default deadline.

“I still believe we have time to make an agreement and get it done,” McCarthy said when asked about his comments earlier this week that they need an agreement this week to avoid default.

One of McCarthy’s negotiators, GOP Rep. Patrick McHenry remained longer at the White House.

The speaker said he does not have another meeting scheduled with President Joe Biden at this time.

Asked about comments made by Progressive Rep. Pramila Jayapal, that Republicans rejected $3 trillion in cuts offered by the White House, McCarthy accused Biden of wanting to tax people more.

“I know the president wants to tax people more … so it really goes to the fundamental problem that we have Democrats want to spend more and tax more,” McCarthy said.

All 213 House Democrats have signed onto a discharge petition Wednesday that can be used as a vehicle to bypass House GOP leadership and force a vote to raise the debt ceiling, leaders announced.

The party took a key procedural step earlier this month to begin setting up the process that would enable House Democrats to bring up a discharge petition. 

However, a majority of House members, 218, need to sign onto the bill in order for it to pass, meaning Democrats would need at least five Republican representatives to support it. As of now, no House Republicans have indicated they plan to sign on, and it remains extremely unlikely the petition could get the votes to pass on the House floor.

Americans who are already trying to navigate persistently high inflation, soaring interest rates, banking turmoil and recession fears are now faced with trying to prepare for the “unthinkable:” a potential US debt default.

Earlier this month, Kimberly Dickerson called up her creditors, asking about contingency plans in the event that her Social Security Disability check doesn’t land in June.

“The only way I can say it is, it’s going to be catastrophic,” said Dickerson, 52, of Richmond, Virginia.

Debt ceiling negotiations are continuing on Capitol Hill as a deadline of default looms larger by the day. Average Americans are taking notice and trying their best to protect themselves and their livelihoods.

A cross-section of Americans told CNN they’re becoming increasingly worried not only about the threat of the US defaulting on some or all of its financial responsibilities but also the effects of any spending cuts made in negotiations.

Teri House of Kansas met with a financial adviser about whether she could bear the cost if her elderly mother’s federal assistance is interrupted, putting the Navy veteran’s established memory care services at risk.

Meanwhile, just outside Detroit, veteran Christopher Land is nervous too. He said his family would immediately feel the impacts of a failed debt ceiling negotiation, and he’s concerned about what it would mean for his fellow residents in need.

“Our retirement savings were wiped out by medical debts years ago,” said Land, 41, whose wife is disabled. “A default could be really bad for us. I’m employed by a city government. We are on public assistance. We have loans. We’re living on the right side of the paycheck-to-paycheck line, but not by a lot.”

In Tucson, Arizona, Alejandro Terrazas fears he may lose a chunk of his retirement savings and rainy day funds if the impasse continues.

“I’m getting up there in years, but I’m not ready to retire probably for 10 more years, and if it’s some temporary thing, I won’t make any moves,” said Terrazas, 60. “But most of my money in retirement is in the stock market, except for the house I own.”

Read what other Americans are saying.