Progressive Democrats are mounting a new effort to make sure their voices are heard in the debt-ceiling talks as the economic risks of bipartisan brinkmanship mount.
Ratings agency Fitch turned up the heat late Wednesday by putting the US on credit watch ahead of a possible downgrade. Yields on Treasury bills due in early June also surged above 7% as investors grew more worried about not getting paid as the US approaches a possible default in just one week.
House Speaker Kevin McCarthy said Wednesday that "things are going a little better" without signaling any new concessions from his side. The key to a deal, he said on Fox Business, is for Democrats “to realize they spend too much money."
On Thursday, amid a Reuters report of a slimmed-down deal taking shape, a lead McCarthy negotiator told assembled reporters that the list of items being negotiated in the room is gradually decreasing but said “nothing is resolved.”
“These are thorny issues,” added Rep. Patrick McHenry (R-NC).
Rising liberal unrest with the negotiations was highly evident Wednesday in back-to-back press conferences that featured the Congressional Progressive Caucus followed by the Democratic House leadership speaking in often heated terms about what they see as an untenable position from the Republicans.
"Kevin McCarthy needs our votes because Kevin McCarthy doesn't have the votes," Rep. Alexandria Ocasio-Cortez (D-NY) said Wednesday afternoon, citing a sizable chunk of the Republican caucus that wouldn’t be amenable to any negotiated deal.
Rep. Pramila Jayapal (D-WA), who leads the 100 most progressive members of the House, said "we are not going to take a deal that hurts working people."
The frustration continued Thursday with with the House of Representatives holding it's last scheduled vote of the week and House Democratic Leader Hakeem Jeffries (D-NY) saying on the House floor he would “stay and fight” on the debt ceiling issue.
House GOP leadership had previously announced that rank and file members could be called back to Washington in the coming days if a debt ceiling deal materializes and is ready for a vote.
Yet, one moderate Democrat said he remains confident a deal will eventually be struck. Rep. Henry Cuellar (D-TX) predicted during an appearance on Yahoo Finance Live that “at the end of the day, you'll have people on the far right [and] on the far left that are not going to be happy” but that a financial crisis will be averted.
What appears evident as the debt ceiling talks approach a potential endgame is that many on both the left and right are likely to end up voting no to a possible deal. The question could quickly become whether there will be enough in the middle to pass it through both chambers of Congress.
More talks are expected Thursday after negotiators met for about four hours Wednesday at the White House.
Rank-and-file lawmakers are preparing to leave town Thursday for the Memorial Day weekend, but leadership has warned they need to be prepared to possibly return to Washington if a deal materializes.
Limited options on both sides
The specific objections from progressive Democrats range from proposed new work requirements for social programs to a Republican insistence that raising revenue is off the table. They also object to proposed spending cuts that would hit programs that “the American people need.”
Yet McCarthy continued to say those issues - in particular the GOP push to cut spending levels cuts back to FY2022 levels - was a red line and claimed "we've offered a lot of concessions" while at the same time offering a hardline stance publicly to appease members of his own caucus.
In his own press conference, Jeffries again called a Democratic counteroffer to freeze spending at 2023 levels - which Republicans have rejected so far - "an inherently reasonable compromise."
Democrats have also tried to rally behind ideas to short circuit the negotiations, from a legislative maneuver called a discharge petition and the legally questionable idea for President Biden to invoke the 14th amendment and declare the debt limit unconstitutional.
Democrats did announce Wednesday that all 213 Democrats had signed on to the discharge petition idea but with no signal that 5 Republicans - who would needed to join the effort to force action - are in the offing.
Republican members of the House Freedom Caucus have taken the position that McCarthy should simply walk away from talks. That also doesn’t appear to be in the offing, with the Speaker promising Wednesday to "stay with it until we can get it done."
A leader of the House Freedom Caucus told his colleagues in a new memo the group’s hardline position is an effort to give McCarthy “the strongest hand.”
Ben Werschkul is Washington correspondent for Yahoo Finance.
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