Negotiations are continuing in Congress about raising the debt ceiling, and it seems that progress is being made despite the risk of payment delays to Social Security beneficiaries and veterans.
Deputy Treasury Secretary Wally Adeyemo, on Friday, expressed optimism about reaching an agreement soon. Adeyemo is reported by Bloomberg as saying that an agreement is critical because defaulting on US government debts is not acceptable.
- It is believed that the impending deal will support both parties’ interests. It is expected to provide for the modernization of the nation’s electric grid to foster renewable energy, which aligns with the administration’s climate change goals. It would also streamline permit processes for fossil fuel projects, which is a preference of the GOP.
- One significant compromise involves cutting $10 billion from the $80 billion budget increase for the Internal Revenue Service (IRS) proposed under President Joe Biden’s Inflation Reduction Act. While Republicans have expressed concerns about the possibility of a surge in audits and agents, Democrats believe the funding boost would minimize tax evasion and effectively pay for itself.
- The prospective deal seems modest compared to the original Republican proposal. They had initially proposed a debt ceiling increase until March next year, coupled with a decade of spending caps. Resistance against a modest deal is emerging among House conservatives, with the House Freedom Caucus pressuring House Speaker Kevin McCarthy to stand his ground.
As yet, the White House has not disclosed any agreements on spending caps or IRS funding to the House Democratic leadership, according to an adviser. However, Bloomberg reports that the odds of reaching an agreement on Friday are excellent.
Treasury Secretary Janet Yellen has warned that her department might exhaust its cash reserves by June 1. On the following day, a significant payment is due to Social Security beneficiaries, adding more pressure on the legislators to settle the disagreement. If the negotiations are successful, a House vote may occur as early as Tuesday, with the Senate following up promptly to forward the deal to President Joe Biden before the critical June 1 deadline. According to Bloomberg, the negotiation’s outcome is crucial, as it may determine whether the US staves off a recession.
While the White House and Treasury stress the need for a speedy resolution, a potential downgrade of the US’s AAA credit rating is under review by Fitch Ratings.
This article was written with the help of AI tools and reviewed and published by Benzinga editors.