© Reuters. FILE PHOTO: U.S. President Joe Biden hosts debt limit talks with U.S. House Speaker Kevin McCarthy (R-CA) in the Oval Office at the White House in Washington, U.S., May 22, 2023. REUTERS/Leah Millis/File Photo
By Jarrett Renshaw, Richard Cowan and Andy Sullivan
WASHINGTON (Reuters) -The White House and congressional Republicans on Friday aim to put the final touches on a deal to raise the U.S. government’s $31.4 trillion debt ceiling for two years while capping spending on everything but military and veterans, according to a U.S. official.
Negotiators for Democratic President Joe Biden and House of Representatives Speaker Kevin McCarthy appeared to be nearing a deal as the two sides reached agreement on key issues, such as spending caps and funding for the Internal Revenue Service and the military.
However, items including work requirements for recipients of federal aid were still holding up the deal, the official said.
A failure by Congress to raise its self-imposed debt ceiling in the coming week could trigger a default that would shake financial markets and send the United States into a deep recession.
The deal under consideration would increase funding for discretionary spending on military and veterans while essentially holding non-defense discretionary spending at current year levels, said the official, who requested anonymity because they are not authorized to speak about internal discussions. A two year extension would mean Congress would not need to address the limit again until after the 2024 presidential election.
The White House is considering scaling back its plan to boost funding at the IRS to hire more auditors and target wealthy Americans, the official said.
The defense and veteran affairs funding matches Biden’s budget released earlier this year, a second U.S. official said.
The agreement would leave many details to be sorted out in the weeks and months ahead.
Each will have to persuade enough members of their party in the narrowly divided Congress to vote for any eventual deal, no small feat with far-right Republicans saying they wouldn’t back any deal without sweeping spending cuts and progressive Democrats resisting new work requirements on anti-poverty programs.
“The only way to move forward is with a bipartisan agreement. And I believe we will come to an agreement that allows us to move forward and that protects the hardworking Americans of this country,” Biden said on Thursday.
One of the Republican…
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