Debt ceiling demands and red lines for the White House and Republicans

As negotiating teams for President Joe Biden and House Speaker Kevin McCarthy work on hammering out a deal to raise or suspend the debt ceiling — with under two weeks until a possible U.S. default — each side has demands, and so-called red lines have been drawn.

Democrats want “clean” legislation, a debt ceiling increase without conditions. They reason that negotiations on spending and the budget can be undertaken after the debt ceiling is resolved. That’s not a solution Republicans like much. 

Republicans are holding out for spending cuts and other provisions. Here are some of them — and how they’re being received.

Work requirements for entitlements 

Republicans want to see work requirements added and tightened for able-bodied adults who apply for entitlements and benefits, including Temporary Assistance for Needy Families (TANF), the Supplemental Nutrition Assistance Program (SNAP) and Medicaid. The across-the-board work requirement would apply to those who do not have dependents. 

House Speaker Kevin McCarthy said Tuesday that this is a red line for him. TANF, formerly known as food stamps, already has some work requirements, as does SNAP. Currently, childless, able-bodied adults 18 to 49 are required to work 20 hours a week or enroll in a work training program to be eligible for SNAP benefits. 

Republicans want to add work requirements for Medicaid, too, and toughen existing work requirements. 

Mr. Biden on Tuesday didn’t rule out the possibility of additional work requirements, but he rejected work requirements that could negatively affect Americans’ health outcomes.

“I’m not going to accept any work requirements that’s going to impact on medical health needs of people,” the president said, adding that he wouldn’t accept work requirements “much beyond what is already” in place.  

Spending cuts or caps

Republicans are also adamant that spending caps or spending cuts need to be a part of any agreement. They’re unlikely to make a deal without them. 

The debt ceiling bill House Republicans recently passed along party lines contains their proposed cuts. McCarthy wants to cap future spending and grow federal spending by just 1% each year. 

The White House isn’t willing to come close to the spending constraints in the House-passed bill. But they are likely to make some concessions here. 

Still, many Democrats won’t like it. 

“There will be a huge backlash if we do something like institute work requirements or cut spending more broadly,” Rep. Pramila Jayapal, a progressive Democrat from Washington, told CBS News. “All of these things disproportionately affect poor people, people in rural areas, Black, Brown, indigenous folks. Those are the people that are going to feel the burden of spending cuts of work requirements. That is not in line with our democratic values at a time when hunger is at a very high rate across the country.”

Recoup appropriated but unspent pandemic money 

Republicans also want to claw back funds appropriated for COVID-19 relief but that have not yet been spent, pointing out that even the administration has declared the pandemic emergency is over. 

Congress passed six large spending bills to manage the fallout from the pandemic, totaling $4.6 trillion. By January, the  about $4.2 trillion of that had already been spent, according to the Government Accountability Office, leaving billions still unspent.

The president said of the funding last week that “we don’t need it all,” although he added that he still needed to “take a hard look at it” to assess what obligations remained. Still, “it’s on the table,” he said.  

Permitting reform

Reforming and streamlining federal infrastructure permitting rules is another item on the GOP’s list of demands. And it’s an area of possible compromise that the White House hasn’t publicly shot down. 

Making cuts to Biden’s signature climate legislation

Republicans also want to tie any debt ceiling increase to cuts to clean-energy incentives in the Inflation Reduction Act. Those incentives include things like credits for energy-efficient HVAC system installations. Slashing those incentives is not something the White House wants to do, but it remains to be seen whether there’s room for compromise.

What other options are there?

Last week, Mr. Biden said he was “considering” invoking the 14th Amendment to circumvent Congress and raise the debt ceiling unilaterally. But he also appeared to express doubt about the practicality of such a move, saying it would “have to be litigated,” and in the meantime, without an extension on the debt ceiling, it could still cause financial instability. 

Five Senate Democrats are nonetheless circulating a letter urging the president to invoke the 14th Amendment. 

“Republicans have made it clear that they are prepared to hold our entire economy hostage unless you accede to their demands to reduce the deficit on the backs of working families. That is simply unacceptable,” the letter reads.

The president also has not ruled out the possibility of a short-term debt ceiling increase, although neither side thinks that’s an ideal solution. 

All parties hope that the decision this week to narrow the negotiations to the White House and House speaker’s representatives will help them reach a deal more quickly. Before he left for Japan Wednesday morning, the president said he’s “confident” the nation “will not default.”

— Jack Turman contributed to this report