May 20, 2023 - Politics & Policy

GOP turned down White House offer to freeze spending

House Speaker Kevin McCarthy. Photo: Andrew Caballero-Reynolds/AFP via Getty Images.

House Republican negotiators declined an offer from the White House to freeze government spending in the 2024 budget as part of a deal to raise the debt ceiling, Axios has learned.

Why it matters: The development underscores how far apart the two sides are on the fundamentals of a deal.

  • The Friday offer, first reported by the Washington Post on Saturday, would keep 2024 defense and non-defense discretionary spending at 2023 levels, two sources familiar with the matter tell Axios.
  • That would amount to a 5% cut when adjusted for inflation – a step back from the Biden administration budget request in March, which proposed increasing discretionary spending.
  • But House Speaker Kevin McCarthy (R-Calif.) is holding out for a decrease in non-defense spending. The debt ceiling bill House Republicans passed in April would cap spending at 2022 levels.

What they're saying: White House Press Secretary Karine Jean-Pierre, in a statement on Saturday evening, said McCarthy's team made an offer a day earlier that was "a big step back and contained a set of extreme partisan demands that could never pass" both the House and Senate.

  • "The President’s team is ready to meet any time. And, let’s be serious about what can pass in a bipartisan manner, get to the President’s desk and reduce the deficit," she said.

The other side: A House Republican source cited the more than $400 billion increase in discretionary spending over the last decade, compounded by trillions more in pandemic-era stimulus spending, as reasons to decrease spending.

  • Republicans also want to increase funding for defense, which would be frozen under the White House's proposal along with non-defense spending.
  • “It was a bad day for negotiations," said Rep. Dusty Johnson (R-S.D.), telling Axios that a "lack of seriousness" from the White House "undermined the progress that we had made on Wednesday and Thursday."

The state of play: Treasury Secretary Janet Yellen has warned that the U.S. could stop being able to pay its debts as early as June 1.

What's next: The two sides are trying to coordinate a direct call between McCarthy and President Biden.

  • "I am concerned. Default is becoming more likely," Johnson said. "Unless we get the president reengaged, I seriously doubt progress is going to be possible ... His team does not seem dedicated to getting a deal."
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