(Bloomberg) – With the time ticking to run out of U.S. Treasury cash, Chairman Kevin McCarthy said challenges remain in negotiations with the Biden administration over raising the federal debt ceiling. .
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Officials from both the White House and Republican camps said the two sides have no plans yet to renegotiate on Thursday, but that could change.
McCarthy told reporters on Thursday morning that the teams had made “some progress” towards a deal on Wednesday. “There are still unresolved issues. I have directed my team to work 24/7 to resolve this issue.”
The California Republican said, “At the end of the day, I don’t think it will make everyone happy. The system just doesn’t work that way.” did not clarify. “I don’t know if we’re going to get a deal today,” he told Fox News.
Financial markets are showing signs of strain as talks drag on. Treasury Secretary Janet Yellen said the Treasury Department could run out of money as early as June 1, with millions of Social Security beneficiaries due to be paid out the next day, leaving a deadlock. He said he was pressuring politicians to resolve the issue.
Key money market rates rose as cash lenders appeared wary of making overnight loans backed by Treasury bills. US stocks rose on the positive earnings news.
Fitch Ratings warned Wednesday of a possible downgrade to the US’s AAA rating. The US lost its AAA rating on S&P Global Ratings in 2011 during a similar partisan battle over the debt ceiling.
The White House and the Treasury Department said Fitch’s move underscores the urgency of resolving the dispute quickly. But McCarthy said he wasn’t worried about Fitch’s announcement and said negotiators didn’t need to remind rating agencies of the importance of closing the deal.
McCarthy didn’t say what the dead end of the talks was, but negotiators have clashed over the amount of spending and how long the bill would include raising or suspending the debt ceiling. Economists warn that a cap on government spending could lead the U.S. into recession, even if a deal is reached to avoid catastrophic payment defaults.
Read more: Modeling US debt ceiling risk as negotiation deadline approaches
The administration has also pushed back against Republican moves to expand employment requirements for some federal aid recipients. A White House official said Thursday that both countries are pursuing the issue and that the president is fighting policies that impoverish Americans and deprive them of health care.
However, both countries have made some progress. A tentative agreement has been reached that includes measures to loosen permitting of transmission lines, according to people familiar with the negotiations.
With just one week left until June 1, rapid action in both houses will be required to get any deal to President Joe Biden’s desk in time. In the Senate, unanimous consent may be required to quickly overcome a congressional hurdle that could take days to debate.
Conservative Republican senator Mike Lee of Utah threatened Thursday morning to block the final deal if it didn’t go to his liking. “I will use all procedural tools at my disposal to block a debt ceiling deal that does not involve major spending or budget reforms,” he said on Twitter.
However, he did not say whether the pace of the temporary debt ceiling extension could slow if talks go past the deadline.
By Wednesday, McCarthy told reporters he was in contact with both Senate Republican leader Mitch McConnell and “the other day” former President Donald Trump.
Read more: Congress still faces time-consuming hurdles in any debt deal
–With contributions from Ryan Teague Beckwith, Akayla Gardner, and Zach C. Cohen.
(updated with no negotiating session scheduled in second paragraph)
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