House negotiators worked into the early hours of Saturday morning, but still have not reached a deal on the debt ceiling. However, they say the possibility of reaching an agreement is within closer reach.
Negotiators say they could strike a deal as early as this weekend. President Joe Biden says he thinks a deal is "very close." The sticking point appears to be over work requirements for federal food aid recipients.
"This is not how I anticipated the final hours — final days — would go. But we're getting to a very narrow set of issues that has to be dealt with, and it's a severe challenge to actually hit that 'X' date," said Rep. Patrick McHenry, a GOP negotiator. "We're all aware of that."
This comes after Treasury Secretary Janet Yellen said Friday that the estimated deadline for the federal debt ceiling would come four days later than was first warned.
In a letter to congressional leaders, Yellen said the Treasury was now forecast to run out of funds on Monday, June 5.
"Based on the most recent available data, we now estimate that Treasury will have insufficient resources to satisfy the government’s obligations if Congress has not raised or suspended the debt limit by June 5," Yellen wrote.
Previous letters had said the Treasury might run out of funds as early as June 1.
What will happen to Social Security if government defaults on debt?
The current gridlock on the nation's debt ceiling could hurt the 67 million Americans collecting Social Security.
Yellen repeated word for word her earlier warning to Congress that waiting until the last minute to strike any deal could increase harm and costs for consumers and businesses nationwide.
"If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests," Yellen wrote.
The shift in deadline is likely to add turbulence to closely followed talks between President Joe Biden and House Speaker Kevin McCarthy, who have spent the last days working out a compromise framework in repeated, on-and-off meetings.
Broadly, a deal is expected to involve spending cuts in 2024 and a percentage cap on spending growth starting in 2025.
Other provisions remain a sticking point, such as Republican demands that government food stamps and other financial aid come with stiffer work requirements.
Any deal is likely to involve elements of compromise, if it is to get bipartisan support to move through Congress.
"The President's budget called for a balanced approach, where we continue to invest in important government programs that provide benefits for middle class families, and we bring down the deficit by $3 trillion, by asking the very wealthy and big corporations to pay their fair share," said Bharat Ramamurti, Deputy Director of the National Economic Council, in an interview with Scripps News. "The Republicans are talking about massive cuts to programs from air traffic control the food inspections, to Meals on Wheels, that would really do harm to typical middle class families. The goal is to see if there's some sort of middle ground between those two positions, where again, there has to be something in there for each party, given the fact that it's going to require Democratic and Republican votes in both the House and the Senate."
President Biden sounded upbeat on the promise of a deal as he left for Camp David late on Friday.
"It’s very close, and I’m optimistic," he said.
North Carolina Rep. Patrick McHenry, negotiation on behalf of Republicans, called President Biden's comments a "hopeful sign."
Lawmakers, meanwhile, have left the Capitol for the Memorial Day holiday. Congressional leadership has warned them that they should be ready to return on 24 hours' notice in case negotiators strike a deal on the debt limit.
The debt ceiling could hurt your 401(k). Here's what you need to know
Some estimate a default on government loans could cause the S&P 500 to drop about 22%, wiping out years of earned wealth for millions of retirees.
