White House optimistic about path forward despite ‘serious differences’ on budget talks

The White House on Friday night tempered its optimism about ongoing talks with Republicans on a budget agreement and debt ceiling increase, acknowledging the two sides have “serious differences” heading into the weekend.

“We have serious differences and this is going to continue to be a difficult conversation. That’s not lost on us,” press secretary Karine Jean-Pierre told reporters in Japan, where President Biden is attending the Group of Seven (G-7) Summit. 

“We are optimistic, the president is optimistic that we’re going to get to a reasonable budget negotiation, a budget agreement here, a bipartisan budget agreement,” Jean-Pierre added. “This is something that has to pass the House and the Senate. It’s going to need both Democrats and Republicans.”

The White House and Republican negotiators have shifted their tone since Thursday, when Speaker Kevin McCarthy (R-Calif.) suggested a deal could be within reach and the White House touted “steady progress” in meetings between negotiators.

Talks were paused on Friday afternoon as Republicans complained that the White House was being “unreasonable.” The White House, meanwhile, said there were “real differences,” but has been adamant that any final agreement must be bipartisan and reflective of a compromise.

The conversation resumed Friday evening.

Jean-Pierre, speaking to reporters on Saturday morning local time in Hiroshima, said “there is definitely a path forward,” but that negotiators needed time and space to work through their differences.

Biden would be updated on talks as they progressed, Jean-Pierre said. The president is set to return to Washington, D.C., on Sunday after he scrapped plans to visit Australia and Papua New Guinea next week.

Time is of the essence for negotiators, as the Treasury Department has warned the U.S. could default as early as June 1 if Congress does not act to raise the debt ceiling.

Jean-Pierre was adamant that the White House was still technically not negotiating with Republicans about the debt ceiling, instead framing it as a “separate conversation about the budget.” But Republicans, who control the House, have made clear they will not pass any debt limit increase without an agreement on spending cuts.

“It cannot be held hostage by Republicans, we have been very clear, by these MAGA Republicans, by the Speaker,” Jean-Pierre said. “We have continued to lay out what the consequences could be, not just to members of the Hill but to the American people.”

One administration official noted that Speaker Kevin McCarthy (R-Calif.) earlier this week acknowledged any final agreement would have to be bipartisan to pass both the GOP-controlled House and the Democrat-controlled Senate.

Republicans seek to cap overall discretionary spending at fiscal year 2022 levels while allowing for 1 percent growth per year for 10 years. Congress passed an omnibus funding bill for fiscal year 2023 in December.

But the White House has been messaging hard against that.

A memo released this week said that if the topline discretionary number is set at that level, and if Republicans hold firm on commitments to not cut defense spending or the budget for the Department of Veterans Affairs and Homeland Security, other programs would be slashed by 30 percent.