May 28, 2023 debt ceiling news

We’ve wrapped up our live coverage for the day. You can read more about the debt ceiling negotiations here, or scroll through the updates below.

President Joe Biden urged Congress to pass the tentative debt limit deal he reached with House Speaker Kevin McCarthy remarks from the White House Sunday evening.

“That agreement now goes to the United States House and to the Senate. I strongly urge both, both chambers to pass that agreement,” the president said.

He later added that it “wouldn’t have made a difference,” when asked if he wished he had agreed to negotiate sooner. 

The president also said that he believes critics will “find” that he did not concede much in the negotiations, and that while he does not support getting rid of the debt limit, he is open to the idea of invoking the 14th amendment in the future to avoid a default. 

When asked about working with McCarthy, Biden said: “I think he negotiated with me in good faith. He kept his word. He said what he would do. He did what he said he’d do and I have no idea whether he has the votes. I expect he does or I don’t think he would’ve made the agreement.”

The debt ceiling agreement clinched by House Republicans and the White House late Saturday was the culmination of mad-dash negotiations over the course of the past week that regularly stretched late into the night.

But the marathon is far from over, and there is little certainty the nation will avoid a default as both parties work to rally support around the package.

Here are some of the elements party leaders will have to deal with as they race to avoid an economic meltdown:

A tough sell to members of both parties: House members on both the left and right are already balking at some of the details said to be included in the debt ceiling package.

Congressional Progressive Caucus Chair Pramila Jayapal told CNN that Democratic leaders should be concerned about securing progressive support for the deal. Meanwhile, hard-line conservative Republicans who had demanded larger spending cuts threatened to withhold their support.

House Rules Committee looms large: McCarthy’s first real test will be Tuesday in the House Rules panel, which must adopt a rule to allow the bill to be approved by a majority of the House.

To win the speakership in January, McCarthy agreed to name three conservative hard-liners — Reps. Ralph Norman of South Carolina, Chip Roy of Texas and Thomas Massie of Kentucky — to the committee, a major concession since the powerful panel is usually stacked with close allies of leadership.

Norman and Roy have already emerged as sharp critics of the debt limit deal, while Massie has been quiet as he waits for the bill text to be released.

In the Senate: Any one member can slow down the process by as long as a week, adding another layer of uncertainty as Washington rushes to avoid default.

The clock is ticking: Treasury Secretary Janet Yellen set June 5 as the date the government will run out of cash to pay its bills in full and on time. The US has never before defaulted, and economists predict the consequences would be catastrophic.

A handful of powerful Senate Republicans have raised concerns about the tentative debt ceiling deal struck between the White House and House Republicans.

In a Senate GOP call Sunday, Maine Sen. Susan Collins, the top Republican on the chamber’s Appropriations Committee, and Mississippi Sen. Roger Wicker, the top Republican on the Armed Services panel, expressed concern about the top-line spending number for defense – which reflects the president’s budget.

The pair argued it was too low to keep up with the rate of inflation, a source on the call told CNN. The source said their pushback was the centerpiece of concern raised on the call and will warrant more “family discussion.” 

The source told CNN that Senate Minority Leader Mitch McConnell was effusive in his praise for House Speaker Kevin McCarthy and his team’s work and hard-fought negotiation.  

The House will return Tuesday night for suspension votes, a source familiar with the matter told CNN, giving GOP leadership the opportunity to whip its members in person ahead of an expected debt limit vote Wednesday.

The whip operation will be intense for the leadership team, as having members in Washington could make it easier for leadership to convince certain lawmakers to support the deal.

Members of the hard-line conservative House Freedom Caucus are expected to meet Monday ahead of the vote so they can gather as a group. A number caucus members have been vocal on Twitter about their outrage over the deal. 

The White House, meanwhile, is planning additional caucus calls for Senate and House Democrats, including virtual briefings on Monday and Tuesday focused on specific aspects of the deal, according to a schedule of the briefings obtained by CNN.

White House representatives on the virtual briefings will include John Podesta, senior adviser to President Joe Biden; Office of Management and Budget Director Shalanda Young; and Aviva Aron-Dine, deputy director of the National Economic Council.

A 2023 tassel rests on a graduation cap as students walk in a procession for Howard University's commencement in Washington, DC, on May 13.

The tentative deal struck by the White House and House Republicans to raise the debt limit would not jettison President Joe Biden’s plan to provide one-time relief for qualifying student loan borrowers, a source familiar with the negotiations said.

The deal would, however, require borrowers to pay back their student loans again, according to a fact sheet circulated by the House GOP.

Repayments on federal student loans, which have been paused since the Covid-19 pandemic began in March 2020, would commence at the end of the summer, as the Biden administration has already announced, another source familiar with the debt ceiling talks said.

Biden’s student loan relief proposal is currently before the US Supreme Court, which is expected to rule on it in coming weeks. The court heard oral arguments in February, when several conservative justices appeared skeptical of the government’s authority to discharge millions of dollars in federally held loans.

If the student loan forgiveness program is allowed to move forward, individual borrowers who made less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 a year could see up to $10,000 of their federal student loan debt forgiven.

If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness.

CNN’s Katie Lobosco contributed to this report

Before the full US House can vote on the tentative debt limit deal struck between President Joe Biden and House Speaker Kevin McCarthy, it has to get through the chamber’s Rules Committee.

The panel must adopt a rule to allow the deal to be considered by the full House, and some conservatives are making their distaste for the deal clear.

To win his speakership, McCarthy agreed to name three conservative hard-liners — Reps. Ralph Norman, Chip Roy and Thomas Massie — to the Rules Committee, a major concession since the powerful panel is usually stacked with close allies of leadership.

There are currently nine Republicans and four Democrats on the Rules panel.

Norman and Roy have already emerged as sharp critics of the debt limit deal, while Massie has been quiet as he waits for bill text to be released.

If all three vote against the rule in committee, that would kill the bill — unless any of the Democrats on the panel vote to advance the rule.

Norman told CNN he would vote against the rule unless major changes are made to the bipartisan deal.

Roy and Massie have not responded to CNN’s requests for comment on the rule.

If the rule is approved in committee, McCarthy must then limit defections to no more than four Republicans to get the rule approved on the floor — assuming all Democrats vote against it, as they typically do for rules.

President Joe Biden speaks with reporters at the White House on Sunday, May 28.

President Joe Biden told reporters Sunday that he’s confident the tentative deal to raise the debt limit will reach his desk.

“I’m about to go in and call (House Speaker Kevin McCarthy) now at 3 o’clock to make sure all the T’s are crossed and the I’s are dotted. I think we’re in good shape,” the president said. 

Asked whether there were any further sticking points, Biden said: “None.”

President Joe Biden and House Speaker Kevin McCarthy won’t speak until they have text for their tentative debt ceiling agreement, chief GOP negotiator Rep. Patrick McHenry said.

The North Carolina Republican did not give a solid timeline for when the text would be produced but said the “whirring of the machines” could probably be heard as officials put it together.

Speaking late Saturday, McCarthy said text of the package would be finalized by Sunday, setting up a required 72-hour period for members of Congress to review the bill. He said he hopes the House will vote as soon as Wednesday, allowing precious little time for party leaders to secure sufficient support.

In the Senate, any one member can slow down the process by as long as a week, adding another layer of uncertainty as Washington rushes to avoid default.

New Hampshire Gov. Chris Sununu speaks on April 25, in New York City.

Republican Gov. Chris Sununu of New Hampshire said Sunday it was “a miracle” a tentative deal was reached to raise the debt ceiling ahead of the crucial June 5 deadline when the US would no longer be able to pay its bills.

After weeks of intense negotiations, House Republicans and the White House announced on Saturday night that they had come to an agreement in principle.

“Both sides seem pretty frustrated, which means it’s probably a pretty good deal, actually,” the New Hampshire governor said, alluding to criticism of the deal from certain progressives and conservatives alike.

Still, Sununu – who said he will decide whether to launch a 2024 presidential bid “in the next week or two” – questioned why action wasn’t taken sooner.

“Why didn’t the Democrats make different changes when they had the chance to do it? Or why didn’t Republicans make certain changes back in ’17 and ‘18 when they … had the chance? It’s like Washington doesn’t know how to react until they have to react,” he said.

The US Capitol building is seen as the sun rises in Washington, DC, on May 28.

Senators from both parties will receive separate briefings Sunday on the tentative debt ceiling deal.

After the White House briefs House Democrats, it will do the same for Senate Democrats through a virtual call at 6:30 p.m. ET, according to a source familiar with the matter.

Meanwhile, House Speaker Kevin McCarthy and his team are scheduled to brief Senate Republicans on a call scheduled for 3:45 p.m.

Senate Majority Leader Chuck Schumer told his colleagues in a letter Sunday that he would “move to immediately begin consideration of the agreement” once it passes the House.

Since the deal was announced Saturday night, the White House and Republican leaders in Congress have been mounting an intensive push to consolidate support.

Senate Majority Leader Chuck Schumer speaks at the Capitol on May 17.

Senate Majority Leader Chuck Schumer wrote to senators Sunday asking them to prepare for potential Friday and weekend votes to pass a debt ceiling hike. 

While he didn’t state his position on the debt limit deal in the letter, the New York Democrat said: “We must avoid default.”

New Hampshire Rep. Ann McLane Kuster, head of the pro-business New Democrat Coalition, signaled Sunday that her 99-member group may support the tentative debt limit deal.

Stiff opposition is expected from both the left and right. That means it’s going to require an intense whipping operation – and support from both sides of the aisle – to get the bill over the finish line in time to avoid the US defaulting on its debt.

The White House and Republicans have agreed on a tentative deal to raise the debt ceiling, House Speaker Kevin McCarthy said Saturday, moving the US one step back from the brink of a historic default.

However, leaders from both parties are now working to convince their members to vote in favor of the deal to avert potential economic catastrophe.

If the United States were to default on its debt, millions of jobs would be impacted, the cost of borrowing money would skyrocket and government benefits many people rely wouldn’t be sent on time.

But for investors hungry for an opportunity to buy low and sell high, it might not be total doomsday.

Markets have been mostly indifferent to the debt ceiling since the US hit the limit in January. That is bound to change as the default date, which Treasury Secretary Janet Yellen has set as June 5, approaches.

What goes down could go up: The S&P 500 fell by more than 16% over the span of five weeks in 2011 when the United States narrowly avoided a default, which led to a downgrade of the nation’s debt. But two months after the downgrade, the S&P 500 recovered those losses and ended the year virtually unchanged.

Even if a deal isn’t reached in time and the United States defaults, it’s unlikely to go unresolved for a long stretch of time, experts told CNN. And when it does get resolved, it’s quite possible there will be a “relief rally,” eToro US investment analyst Callie Cox said.

But there could be a correction period immediately following a deal as the Treasury replenishes the cash it burned through when it couldn’t borrow money, said Michael Reynolds, vice president of investment strategy at Glenmede.

Should you buy the potential debt-limit dip? “There’s been a lot of reward for when people step in and buy the dip,” Cox said. Many investors are still kicking themselves over not buying more stocks at their lows during the height of the pandemic, she added.

But you can’t look at the market in a vacuum.

“We have so many other pressures weighing on the economy,” Cox said. The US economy has spent the past year defying recession forecasts, but its luck could run out later this year, according to a survey of business economists. Many big-box retailers’ earnings reports indicated that consumers are cutting back on nonessential purchases, a possible sign of a looming recession.

“You don’t want to get over-invested with a recession on the horizon,” Reynolds said. In his view, it’s only worth taking advantage of a market sale if the S&P 500 dips below 16% of its current value.

If you’re a short-term investor it’s better to err on the side of caution, Cox said. But as a long-term investor, if you see stock prices drop below 5% of their current value, “it may make sense to buy into that.”

Overall, “it’s really hard to get excited about this market until inflation hits 2%,” she said.

Read more here.

Less than 24 hours after the White House and House Speaker Kevin McCarthy announced a tentative deal to raise the debt ceiling, some hard-line conservative Republicans are already voicing fierce opposition. 

But some conservative, including Ohio Rep. Jim Jordan, sounded more upbeat about the deal during a private call with Republicans on Saturday night, according to a source on the call.

And GOP Rep. Dusty Johnson, who helped negotiate the deal alongside Republican leaders, told CNN “the most colorful conservatives” were the ones with concerns.

“But, overwhelmingly, Republicans in this conference are going to support the deal. How could they not? It is a fantastic deal,” the chair of the center-right Republican Main Street Caucus said.

McCarthy on Sunday also brushed aside concerns that he won’t have enough Republican votes for the deal, saying that he was confident he will get a majority of his conference’s support.

Traders work the floor of the New York Stock Exchange on May 25, in New York City.

You’d expect the stock market to surge after the White House and House Republicans reached a tentative deal to raise the debt ceiling. But markets may have other plans.

The stock market, for the most part, has been ignoring the serious risks associated with the United States defaulting on its debt. Even if Congress passes a bill to raise the debt ceiling and President Joe Biden signs it, it could take months before stocks and other financial markets move on.

If markets get what they ultimately want — no debt default — they’ll have to buckle up for a potentially rough ride immediately after a deal is signed.

That’s because the Treasury will instantly need to replenish the cash it burned through during the period of extraordinary measures when it could not borrow more money.

This will create more competition for equity from investors, said Michael Reynolds, vice president of investment strategy at Glenmede. After weighing their options, many investors may find the returns from investing in US Treasuries better than stocks. That will temporarily suck some liquidity out of the stock market, he said.

Read more here.

House Democratic leader Hakeem Jeffries speaks at a press conference on the debt limit in Washington, DC, on May 24.

House Democratic leader Hakeem Jeffries declined to say Sunday whether a majority of his caucus would support an agreement struck by the White House and Republicans to raise the debt ceiling, even as he voiced confidence the nation would avoid a default.

Stiff opposition is expected from both the left and right. That means it’s going to require an intense whipping operation – and support from both sides of the aisle – to get the bill over the finish line.

The tentative deal struck by President Joe Biden and House Speaker Kevin McCarthy calls for temporarily broadening of work requirements for certain adults receiving food stamps.

Childless, able-bodied adults ages 18 to 49 are currently only able to get food stamps for three months out of every three years unless they are employed at least 20 hours a week or meet other criteria. The deal would raise the age to 54, according to a source familiar with the debt limit negotiations. A fact sheet circulated by House Republicans says it would apply to those up to age 55.

However, the deal would also expand exemptions for veterans, people who are homeless and others in the Supplemental Nutrition Assistance Program, or SNAP, as food stamps are formally known.

And all the changes would end in 2030.

The agreement would also make changes to the current work requirements in the Temporary Assistance for Needy Families program.

Work requirements would not be introduced in Medicaid, which House Republicans had called for in their debt ceiling bill.

Read more about what’s in the tentative deal here.

Rep. Jim Himes speaks during a hearing in 2020.

Connecticut Rep. Jim Himes, the top Democrat on the House Intelligence Committee, said Sunday he was leaning toward a “no” vote on the tentative deal to raise the debt ceiling for two years.

A former chair and current member of the pro-business New Democrat Coalition, Himes said he did not want to validate the negotiating process used by Republicans, “which at the end of the day is a hostage-taking process.”

The Connecticut Democrat said he would join the 5 p.m. ET call with President Joe Biden and the rest of the caucus on Sunday, but maintained he was not a “yes” vote at this time.

Rep. Pramila Jayapal speaks at a press conference on May 24, in Washington, DC.

Washington Rep. Pramila Jayapal, the chair of the Congressional Progressive Caucus, said Sunday that White House negotiators and Democratic leadership should be concerned about progressive support for the tentative deal to raise the debt ceiling.

“Yes, they have to worry,” Jayapal told CNN’s Jake Tapper on “State of the Union” referring to some of the concessions made by the White House to reach the agreement.

Whether House progressives will ultimately support the deal will depend on the exact specifics of the agreement reached between President Joe Biden and House Speaker Kevin McCarthy, Jayapal said, including how many people are affected by expanded work requirements for certain adults receiving food stamps. The deal would also expand exemptions for certain recipients.

The Washington Democrat said that she was briefed by top White House official Lael Brainard after the current framework was agreed to but that she still has many questions on the bill specifics and will not make her position clear until she can see legislative text.  

“That’s always, you know, a problem, if you can’t see the exact legislative text. And we’re all trying to wade through spin right now,” Jayapal said.