May 26, 2023 Latest on the debt ceiling negotiations

President Joe Biden said a debt ceiling deal is "very close" and that he hopes to know by this evening whether there will be an agreement as both sides race against the clock to avoid a first-ever default. 

"There's a negotiation going on. I'm hopeful we'll know by tonight whether we're going to be able to have a deal," Biden told reporters Friday before he left Washington, DC, to Camp David for the weekend. 

Asked by CNN’s Jeremy Diamond about Democrats saying he shouldn’t bow on work requirements, Biden said: “I don’t bow to anybody.”

A senior White House official said earlier Friday that the Biden administration believes it is “on track” to get a deal passed in time to avert a June 5 deadline. The official said the White House thinks parties are "in the final stages of negotiations."

What Republicans are saying: Key GOP negotiator Rep. Patrick McHenry also struck an optimistic tone Friday night about the state of the debt ceiling talks, saying he agrees with Biden’s assessment that they are close to a deal. 

But the Republican from North Carolina said of Biden’s tone, “That is a hopeful sign to me. And I've rarely used that term in the last 12 days that I've been involved in this. So the hopeful sign that the president is saying those things, tells me his White House team, you know, might be in a better disposition than what we've seen in previous days.”

He declined to say whether he thinks the White House is moving in the GOP’s direction on work requirements, which has been a chief sticking point. 

White House spokesperson Andrew Bates on Friday sharply criticized Republican proposals to include work requirements as part of the debt ceiling and budget deal, saying the White House is "standing against this cruel and senseless tradeoff." 

On timing, McHenry said: “These are the things we have to just work through. And I don't know how long that's gonna take. I don't know if that's hours or days.”

McHenry signaled the two sides are trading legislative text as they go along instead of just toplines, so they’re not starting from scratch when they go to write the actual bill.

CNN's Melanie Zanona, Kristin Wilson and Manu Raju contributed reporting to this post.

White House spokesperson Andrew Bates sharply criticized Republican proposals to include work requirements as part of the debt ceiling and budget deal, saying the White House is "standing against this cruel and senseless tradeoff." 

Asked by CNN’s Jeremy Diamond about Democrats saying he shouldn’t bow on work requirements, President Joe Biden said earlier this evening that he doesn't “bow to anybody.”

Lael Brainard, director of the National Economic Council, said the new June 5 timeline "underscores the urgent need for Congress to act swiftly to prevent default." 

Brainard also backed up the Treasury Department's ability to now provide a firmer estimate, noting that it has estimated since January that the X-date would be in early June and that "with the benefit of additional data on outlays and receipts, the Treasury Department is now able to make a more specific estimate of June 5."

The Treasury Department will send out more than $130 billion in payments in the first two days of June, including ones to veterans and Social Security and Medicare recipients.

This will leave the agency with “an extremely low level of resources,” Treasury Secretary Janet Yellen wrote in a letter Friday to House Speaker Kevin McCarthy and other congressional leaders.

In that same letter she updated her estimated default deadline to June 5. Yellen had previously estimated that the earliest possible day a default could occur was June 1.

During the week of June 5, Treasury is scheduled to make an estimated $92 billion of payments and transfers – but it projects that it will not have the resources to meet all these obligations, she continued.

Ever since the US hit its borrowing cap in January, Treasury has been forced to rely on cash and extraordinary measures to pay the bills until Congress either raises or suspends the debt ceiling.

The agency had $38.8 billion of cash on hand, as of Thursday, according to federal data. The amount bounces around as Treasury takes in revenue and makes payments, but the balance has declined from $238.5 billion at the start of the month, when the coffers were relatively flush from tax collections in April.

Treasury had about $67 billion remaining in extraordinary measures as of Wednesday, down from around $220 billion at the end of January.

Yellen’s new estimate is in line with projections from other groups, including the Congressional Budget Office. Many have said the X-date will likely fall in early June.

House Minority Leader Hakeem Jeffries slammed “MAGA Republicans,” in particular GOP Rep. Garret Graves, for not willing to budge on work requirements in order to reach a debt deal as the threat of a default looms. 

“That’s exactly the type of reckless Republican rhetoric that is driving our country toward a default for the first time in American history,” the Democrat from New York told CNN’s Wolf Blitzer Friday. 

Such comments leave “many to rationally conclude that what the extreme MAGA Republicans want to do is crash the economy, trigger a recession because they believe, as many of them have said, that it will be in their political benefit in 2024,” he added.

Earlier Friday, Graves, a House GOP negotiator, doubled down on the controversial work requirements policy, making clear that they’re not willing to back down. Republicans are advocating for policy that would require more low-income Americans to work in order to receive government benefits, particularly food stamps and Medicaid.

The policy has been a sticking point in the negotiations, and Jeffries said “extreme MAGA Republicans” are pushing for work requirements to be included in the deal that “they know they cannot accomplish through the normal legislative process.” 

“That is the reason why we’re in this situation,” Jeffries said. 

Jeffries would not guarantee that House Democrats will deliver the votes needed to pass any negotiated deal, saying part of the challenges Democrats face is “it’s unclear how many votes House Republicans can produce.” 

As he left the speaker’s office, GOP negotiator Rep. Patrick McHenry said there are still “tough things that remain” in debt ceiling negotiations, but a deal is "within reach" and the House could pass a bill to avoid a June 5 default if an agreement comes quickly.

Asked by CNN on whether a deal was still possible, McHenry said, “The deal is within reach, it just has to be agreed to, and we're waiting for the White House to understand the current set of terms we're dealing with.”

He said the Treasury Department's new June 5 X-date means "we're in the window" to meet the deadline.

He said there are issues that are “not resolved” on “important matters.”

Asked if work requirements for social safety net programs remain the key sticking point, he said it's more than just that detail.

"It's the overall package that changes the trajectory of our fiscal house the United States," the lawmaker said.

A senior White House official said the new June 5 X-date does not fundamentally change the timeline for negotiations to reach a debt ceiling deal — but the specific date highlights the urgency of moving quickly to clinch an agreement.

The White House believes it is “on track” to get a deal passed in time to avert a June 5 deadline, the official said.

While the June 5 date, announced by Treasury Secretary Janet Yellen on Friday, gives the White House slightly more breathing room as compared to the previously earliest possible date of June 1, the official said the timeline still remains highly pressurized, and stressed the need to move urgently to reach a deal.

The Treasury Department has not said what it would do if it runs out of funds to pay all the nation’s bills in full and on time before Congress acts on the debt ceiling. Treasury Secretary Janet Yellen has refused to answer that question, which she’s been asked repeatedly.

However, many experts expect that Treasury would prioritize payments on the nation’s debt, which was seriously contemplated in prior debt ceiling impasses, including 2011, but never finalized since lawmakers lifted the borrowing cap in time.

The hope would be to minimize some of the financial and economic fallout of being unable to satisfy all the nation’s obligations, though it would not avoid it completely.

More recently, Yellen has said that if Congress doesn’t act in time, “Treasury and President Biden will face very tough choices.”

Key GOP negotiator Rep. Garret Graves of Louisiana has returned to Capitol Hill after attending an event at the White House celebrating the LSU Tigers, this year's NCAA women's basketball champions.

Graves, as he headed into the speaker’s office, said he spoke to Office of Management and Budget (OMB) director and fellow Louisianan Shalanda Young while at the White House. 

Graves said work requirements continue to be a “huge sticking point.”