Shalanda Young couldn’t sleep.
A small group of Biden administration officials spent the past two days in intense talks with House Republicans in an effort to avoid a catastrophic government default. Ms. Young, the White House budget director, was trading proposals on the federal spending cap with negotiators appointed by Speaker Kevin McCarthy, whose Republican caucus refused to raise the nation’s $31.4 trillion debt limit without deep cuts.
Now, as she scrolled through Netflix in search of “bad television” to distract her racing mind, Ms. Young had a sinking feeling. If he cuts a deal to cut spending and raise the debt ceiling, only to see Republicans try to force through even deeper cuts when it’s time to pass the annual appropriations bill this fall?
The next morning at work, Ms. Yang asked her employees how to prevent this from happening. they are Settle on a plan, which would essentially punish Republicans’ most cherished spending programs if they fail to follow through on the deal’s outline. They then forced Republicans to include that plan in the legislative text that codifies the agreement.
The approach reflects a broader strategy President Biden’s team has followed in debt ceiling negotiations, according to interviews with current and former administration officials, some Republicans and other people familiar with the negotiations.
That strategy paid off on Saturday Mr. Biden signed the Fiscal Responsibility Act of 2023 on the legislation, just days before a possible default and weeks of negotiations and a revolt by right-wing lawmakers in the House that put a deal at risk of falling apart.
Pursuing a deal, the Biden team was willing to give Republicans victory after victory on political talking points, which they understood Mr. McCarthy would need to sell the bill at his convention. They allowed Mr. McCarthy’s team to eventually claim that the deal included deep spending cuts, huge clawbacks of unspent federal coronavirus relief money and tougher work requirements for federal aid recipients.
But in the details of the text and the many party agreements that accompany it, the Biden team wants to win on substance. With one major exception — cutting $20 billion in enforcement funding for the Internal Revenue Service — they believe they did.
As administration officials see it, the full final deal spending cuts are no worse than expected in regular appropriations bills passed by a divided Congress. They agreed to structure the cuts so they would appear to save $1.5 trillion over a decade in the eyes of the nonpartisan Congressional Budget Office. But thanks to side deals — along with some accounting tricks — White House officials estimate that actual cuts could total $136 billion over the two implementation years of the spending caps at the heart of the deal.
Much of the $30 billion in locked-back Covid-19 money was likely never going to be spent, Biden officials say, including dollars from an aircraft manufacturing program that has largely ended.
At one point in the negotiations, administration officials proposed including more than 100 relief programs in the deal from which they were willing to withdraw money. The final list spanned 20 pages of a 99-page bill and was championed by Mr McCarthy on the House floor. But because much of the money was redeployed to other expenses, the net savings added up to just $11 billion over two years. One of the programs had a remaining balance of only $40.
Many Democrats are outraged that the deal included New job requirements That could push 750,000 people off food stamps, which the Biden team graciously decided it had to accept.
That measure alone could tank Democratic support for the deal in Congress, officials knew. So they tried to balance that with efforts to expand food stamp eligibility for seniors, the homeless and others, which Republicans agreed to do. The budget office concluded that the changes would actually add recipients to the program on net.
Some Democrats and progressive groups have sharply criticized Mr. Biden for negotiating the debt ceiling, decrying the spending cuts and job requirements and saying he has cemented Republicans’ ability to release the debt ceiling whenever a Democrat takes over the White House.
Republican negotiators sold the deal as a game-changing blow to Mr. Biden’s spending ambitions. “There are absolutely tire tracks on them in this negotiation,” Representative Garrett Graves of Louisiana said before the House vote on Wednesday.
Mr. Biden sees it differently. As the Senate prepared to pass the deal Thursday evening, he told his chief of staff, Jeffrey D. Mr. Giants hung out with the president’s adviser, Steve Ricchetti, and other associates in his West Wing office. The White House. Mr. Biden asked them what you might call a scorecard question: What percentage of House Democrats voted for the deal and what share was expected in the Senate?
When Mr. Ricchetti told him that Democrats in both chambers would outnumber Republicans supporting the deal, Mr. Biden cheered. This was validation in his view that he had cut a good deal.
Mr. Giants pointed to that vote share in an interview Friday. “If you go back a few months ago, no one would have thought this was possible,” he said.
It was not a sure result. Negotiating groups have come to the table with differing views on the drivers of the federal debt in recent years. White House negotiators blamed the Republican tax cuts. Republicans have blamed Mr. Biden’s economic agenda, one of which Debt-financed Covid relief bill in 2021 and a Bipartisan infrastructure bill At the end of that year.
At times, disputes become extreme. At one point, after Mr. Biden’s negotiators criticized the 2017 Republican tax cuts, a “very mild-mannered” aide of Mr. McCarthy stood up, pointed the finger at the Biden team and responded warmly that their argument was nonsense, using an expletive, Mr. Graves described. did
Mr. Biden has insisted for months that he would not discuss raising the debt ceiling. But privately, many of the aides were planning negotiations all along—even though they refused to acknowledge that those negotiations were tied to the debt ceiling. The Biden team argued that fiscal issues would have to be addressed this year anyway, both in the appropriations bill and in programs like food stamps that are regularly reauthorized. farm bill.
Mr. Biden’s economic advisers, including National Economic Council Director Lell Brainard and Treasury Secretary Janet L. Yellen, were warning of catastrophic damage to the economy if the government could no longer pay its bills on time.
The President appeared to be winning even before the negotiations began. He urged Republicans to agree in his State of the Union address that Social Security and Medicare won’t be off the table — thanks to a spontaneous riff that grew out of a passage in his speech that he’s worked extensively with in previous days. He proposed a budget filled with tax increases on the wealthy and corporations intended to reduce the debt, but he refused to engage Mr. McCarthy in serious negotiations until Republicans offered their own spending plan.
At the end of April, The House passed a bill It features $4.7 trillion in savings from spending cuts, repealing clean-energy tax breaks and refunds for Covid relief, and the IRS. It features work requirements and measures to speed up fossil fuel projects, and it extends the debt ceiling for a year.
Mr. Biden, business groups and others who feared that the United States could run out of money before raising the debt ceiling, soon agreed to name a team of negotiators. The White House team was led by Ms. Young and one of her top aides, Michael Linden, who delayed his departure from the White House to help negotiate with legislative affairs director Louisa Terrell and Mr. Ricchetti.
Mr. McCarthy’s negotiators gave the impression to Biden officials that in order to reach a deal, they needed at least one word on each major aspect of the House Republican debt limit bill.
The discussion took some surprising turns. Multiple White House officials said Republicans have briefly entertained relatively modest proposals to raise tax revenue, including closing loopholes that benefit real-estate owners and cryptocurrency traders. Those discussions quickly stalled.
Democrats agreed to fast-track Natural gas pipelinesWhich officials acknowledged was good for Mr. Biden’s pledge to support Senator Joe Manchin III, Democrat of West Virginia. Climate Act signed last year.
The spending caps ended roughly where many Biden aides predicted they would come in private negotiations months ago. But some White House officials believed they would have to give up $20 billion of the $80 billion that Democrats approved last year to help the IRS crack down on tax fraud. Mr. Biden hashed out the amount in a final call with Mr. McCarthy.
Ms Young said the cut was painful. “And not just for me,” he added. “It’s something we’ve talked about with the president many times. He cares deeply about this.”
In Mr. Giant’s office Thursday evening, the president and his team focused on the opposite. They defeated Republican efforts to repeal the Climate Act, add new work requirements on Medicaid recipients and impose mandatory spending caps for a decade. Mr. Biden was particularly happy to protect key veterans programs from cuts.
On Friday mornings, Mr. Giants assembled key officials in his office, as he had done every day, seven days a week, for several weeks. Ms. Brainerd and the economic team were relieved to clear the threat of default not just for this year, but through the next presidential election. Aides worked to honor Mr. Biden’s planned remarks in one Friday evening Oval Office address.
The speech began at 7:01 p.m., unusually promptly for Mr. Biden. By then, his staff was already celebrating. Happy hour started at Mr. Giant’s office an hour ago.
Katy Edmondson Contribution reporting.
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