How lawmakers negotiated through fits and starts to strike a debt-limit deal

Tribune Content Agency

With roughly two weeks until the US Treasury was going to run out of money to pay the government’s bills, the negotiations in Washington to lift the nation’s debt limit blew up.

It was Friday morning, May 19, and teams representing President Joe Biden and House Speaker Kevin McCarthy had convened in an ornate meeting room on the Capitol’s first floor with a view of the National Mall. The House and Senate were out of session, so the Capitol was quieter than usual and the dress was casual.

But less than a half hour later, it was over.

“Look, they’re just unreasonable,” Republican Representative Garret Graves, wearing a denim shirt and khakis, said of Biden’s negotiators as he walked out.

Financial markets, which had been mostly sanguine about the prospects of getting a debt-limit deal before the US defaulted, were jolted. After hitting a nine-month high the day before partly based on upbeat comments from McCarthy, the S&P 500 slumped and at one point lost almost 0.8% before recovering somewhat to end the day.

The aborted meeting, coming a little more than a week after talks began in earnest, was a vivid example of the stop-and-start nature of deal making in Washington: Months of political posturing, weeks of fraught negotiations and sudden compromise.

In the end, the two sides were able in a few short weeks to strike an agreement that would avoid triggering a government default, even as it falls far short of a grand bargain that would make a significant dent in the nation’s debt load.

This account of how they did it is based on conversations with dozens of lawmakers, White House officials and congressional staff.

Hours after the morning blowup over spending levels, the negotiators returned to the frescoed room and hunkered down again for what turned out to be another airing of grievances over spending. The meeting broke up after about 90 minutes.

But there were some green shoots. Graves and White House Budget Director Shalanda Young, both from the same part of Louisiana, left the meeting for some one-on-one talks. They joked later that they were arguing about which of them makes the best gumbo. Graves at one point later called Young “the brightest person in the room” for her detailed grasp of the federal budget.

Good feelings aside, little was resolved. Representative Patrick McHenry of North Carolina, another GOP negotiator, said he didn’t think a deal could clear Congress by June 1, the initial deadline to raise the debt limit.

McCarthy took a break Saturday morning to a walk along the Mall. Accompanied by a security detail and dressed in a black shirt and shorts, he answered “so so” when asked about the talks. Anticipating another round of negotiations that day, GOP aides stocked the meeting room with meals from Chick-fil-A. But the fast food slowly grew cold with no one talking.

The speaker met for hours in his office with his core negotiating team, McHenry, Graves and Chief of Staff Dan Meyer. Emerging, he accused the White House of bowing to the Democratic Party’s “socialist wing” by insisting on spending more next year, not less. He said progress couldn’t be made until Biden returned from Japan, where he was attending an international summit.

As he was leaving Japan on Sunday, Biden shed his usual sunny optimism. He said some House Republicans might want a default to hurt his re-election chances. He also pointed out that Democratic votes would be needed for any deal to clear the House in the face of opposition from conservative Republicans.

He called McCarthy from Air Force One and suggested they meet face-to-face on Monday. They talked through many of their differences, trying to move past the bitterness that had blown up at the Friday meeting.

McHenry later described the resulting Oval Office meeting as a turning point. Biden and McCarthy had very little history together. McHenry joked that it wasn’t easy to build a relationship because “you got two Irish guys who don’t drink.” But the talk between the two leaders created a positive atmosphere that moved both sides toward a deal.

Negotiators reconvened Monday night with aides carrying in bags delivered by Insomnia Cookies. In a good sign, both sides stayed mum about the status of the talks.

As the negotiations plodded along, dissent was brewing on the right and the left.

Some conservative Republicans questioned the default timeline laid out by Treasury Secretary Janet Yellen. McCarthy was warned by his leadership team that there would be backlash from conservatives if he didn’t get their demands for Medicaid work requirements and rolling spending back to 2022 levels, according to a person familiar with the discussions. Yet there was no deal that could satisfy all House Republicans that had a chance of getting Democratic votes, which would be needed in the Senate.

Publicly, McCarthy expressed optimism. That wasn’t matched by analysts at Fitch Ratings, who placed the nation’s AAA credit rating on watch, reflecting growing concern of a default.

At the same time, there was grumbling among Democrats. In a telephone call later that week with Young and other members of Biden’s team, House Democratic Leader Hakeem Jeffries and his leadership team said party members were increasingly concerned about the deal that was emerging, according to a person familiar with the discussion, particularly the work requirements demanded by Republicans.

Heading into the Memorial Day holiday weekend, McHenry again struck a pessimistic note. Asked what he would say to Wall Street investors about the talks, he responded, “Glad the market’s closed.”

But a series of tentative compromises were being worked out on spending caps, the defense budget and Internal Revenue Service funding. There also were some deal sweeteners like changes to the energy permit process and electrical grid upgrades.

The logjam broke on Saturday the 27th. Biden spoke with Jeffries and Senate Majority Leader Chuck Schumer in the late afternoon, and then with McCarthy at 6 p.m. for a pivotal, 90-minute conversation that closed the main divisions, including work requirements and spending cap levels.

Both sides announced that an accord had been reached. Then the sales job began.

Biden called Senate GOP leader Mitch McConnell and a key ally, Representative Jim Clyburn of South Carolina, who was dispatched to promote the agreement on news programs. The president and members of his administration briefed Democrats in the House and Senate. Young, White House Chief of Staff Jeffrey Zients, counselor Steve Ricchetti and congressional liaison Louisa Terrell stayed in touch with Democratic leaders and other members. One argument was that some aspects of the agreement could be undone later.

McCarthy set up a Saturday night call with all House Republicans to go over the terms. On Sunday, he spoke with GOP senators. There also were one-on-one meetings and a Tuesday session with all House Republicans in a basement conference room at the Capitol. Over pizza, McCarthy and other GOP leaders pleaded for unity and said it was the best deal that could be had.

That set the table for a Wednesday House vote, but arm-twisting for votes continued up to the final minute. At one point, Representative Joyce Beatty of Ohio spoke with Biden from the basement of the Capitol as her aides huddled around listening on speaker phone. Before ending the call, the president said, “I love ya.”

The left and right still shunned the agreement. Yet the center held. It passed easily with one of the most bipartisan votes in recent history: 149 Republicans and 165 Democrats.

While the Senate is usually hobbled by its rules from quick action, Schumer and McConnell used their clout to short-circuit delaying tactics. As in the House, many conservatives and liberals were unhappy.

Those factions attempted to bog things down by filing multiple amendments, all unsuccessful, to change the legislation. Just before 11 p.m. they were done, and the legislation finally cleared the Senate on a 63-36 vote.

So another crisis in Washington had ended. Biden thanked McCarthy and his advisers for “negotiating in good faith.” McCarthy praised the team that the president sent to Capitol Hill. One key player expressed relief, with a bit of humor, that she was done, for now, with the long days and nights.

“I will see my child again,” Young said at the White House after negotiations at the Capitol had finally concluded. “And I do have a small confession to make: I’m also out of clean clothes after these last couple weeks.”


—With assistance from Josh Wingrove, Zach C. Cohen, Anna Edgerton, Jarrell Dillard, Ari Natter, Jennifer Jacobs, Kailey Leinz and Steven T. Dennis.