<div style="text-align: justify; "><b style="font-size: 1rem;">President Joe Biden said a deal to resolve the government's debt ceiling crisis seemed “very close” late Friday, even as the deadline for a potentially catastrophic default was pushed back to June 5 and seemed likely to drag negotiations between the White House and Republicans into another frustrating week.</b><br></div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The later “X-date,” laid out in a letter from Treasury Secretary Janet Yellen, set the risk of a devastating default four days beyond an earlier estimate. It came as Americans and the world uneasily watched the negotiating brinkmanship that could throw the U.S. economy into chaos and sap world confidence in the nation's leadership.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Yet Biden was upbeat as he left for the Memorial Day weekend at Camp David, declaring, “It's very close, and I'm optimistic.”</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">With Republicans at the Capitol talking with Biden's team at the White House, the president said: “There’s a negotiation going on. I’m hopeful we’ll know by tonight whether we’re going to be able to have a deal.”</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">In a blunt warning, Yellen said failure to act by the new date would “cause severe hardship to American families, harm our global leadership position and raise questions about our ability to defend our national security interests.”</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Anxious retirees and others were already making contingency plans for missed checks, with the next Social Security payments due next week.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Biden and Republican House Speaker Kevin McCarthy seemed to be narrowing on a two-year budget-slashing deal that would also extend the debt limit into 2025 past the next presidential election. After frustrating rounds of closed-door talks, a compromise had appeared to be nearing on Friday.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Republicans have made some headway in their drive for steep spending cuts that Democrats oppose. However, the sides are particularly divided over McCarthy's demands for tougher work requirements on government food stamp recipients that Democrats say is a nonstarter.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Earlier Friday, McCarthy said his Republican debt negotiators and the White House had hit “crunch” time, straining to wrap up an agreement. He left late Friday night without comment.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Any deal would need to be a political compromise, with support from both Democrats and Republicans to pass the divided Congress. Failure to lift the borrowing limit, now $31 trillion, to pay the nation’s incurred bills, would send shockwaves through the U.S. and global economy.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">But many of the hard-right Trump-aligned Republicans in Congress have long been skeptical of Treasury's projections, and they are pressing McCarthy to hold out.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">As talks pushed into another late night, one of the negotiators, Rep. Patrick McHenry, R-N.C., called Biden’s comments “a hopeful sign.” But he also cautioned that there’s still “sticky points” impeding a final agreement.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">While the contours of the deal have been taking shape to cut spending for 2024 and impose a 1% cap on spending growth for 2025, the two sides remain stuck on various provisions.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">A person familiar with the talks said the two sides were “dug in” on whether or not to agree to Republican demands to impose stiffer work requirements on people who receive government food stamps, cash assistance and health care aid.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">House Democrats have called such requirements for health care and food aid a nonstarter.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Asked if Republicans would relent on work requirements, Republican negotiator Rep. Garret Graves of Louisiana fumed, “Hell no, not a chance."</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">House Republicans displayed risky political bravado in leaving town for the holiday. Lawmakers are tentatively not expected back at work until Tuesday, but now their return date is uncertain.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">“The world is watching,” International Monetary Fund Managing Director Kristalina Georgieva said after meeting Friday with Yellen. “Let’s remember we are now in the 12th hour.”</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Weeks of negotiations between Republicans and the White House have failed to produce a deal — in part because the Biden administration resisted negotiating with McCarthy over the debt limit, arguing that the country's full faith and credit should not be used as leverage to extract other partisan priorities.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">“We have to spend less than we spent last year. That is the starting point,” said McCarthy.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">One idea is to set the topline budget numbers but then add a “snap-back” provision to enforce cuts if Congress is unable during its annual appropriations process to meet the new goals.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">On work requirements for aid recipients, the White House is particularly resisting measures that could drive more people into poverty or take their health care, said the person familiar with the talks, who was granted anonymity to describe behind-closed-door discussions.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Over the Republican demand to rescind money for the Internal Revenue Service, it's still an “open issue” whether the sides will compromise by allowing the funding to be pushed into other domestic programs, the person said.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">In one potential development, Republicans may be easing their demand to boost defense spending beyond what Biden had proposed in his budget, instead offering to keep it at his proposed levels, according to another person familiar with the talks.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The teams are also eyeing a proposal to boost energy transmission line development from Sen. John Hickenlooper, D-Colo., to facilitate the buildout of an interregional power grid.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">They are all but certain to claw back some $30 billion in unspent COVID-19 funds now that the pandemic emergency has officially been lifted.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Meanwhile, McCarthy is feeling pressure from the House's right flank not to give in to any deal, even if it means blowing past the Treasury deadline.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">McCarthy said Donald Trump, the former president who is again running for office, told him, “Make sure you get a good agreement.”</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Watchful Democrats, though, are also pressing Biden. The top three House Democratic leaders, led by Rep. Hakeem Jeffries, spoke late Thursday with the White House.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">McCarthy has promised lawmakers he will abide by the rule to post any bill for 72 hours before voting. The Democratic-held Senate has vowed to move quickly to send the package to Biden’s desk, right before next Thursday's possible deadline.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">Meanwhile, Fitch Ratings agency placed the United States’ AAA credit on “ratings watch negative,” warning of a possible downgrade.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">The White House has continued to argue that deficits can be reduced by ending tax breaks for wealthier households and some corporations, but McCarthy said he told the president as early as their February meeting that raising revenue from tax hikes was off the table.</div><div style="text-align: justify;"><br></div><div style="text-align: justify;">While Biden has ruled out, for now, invoking the 14th Amendment to raise the debt limit on his own, Democrats in the House announced they have all signed on to a legislative “discharge” process that would force a debt ceiling vote. But they need five Republicans to break with their party and tip the majority to set the plan forward. AP/UNB</div><div style="text-align: justify;"><br></div><div style="text-align: justify; ">bnbd24/kh</div>