Shalanda Young couldn’t sleep.
A small team of officials from the Biden administration had spent the past two days engaged in intense negotiations with House Republicans in an effort to stave off a catastrophic government bankruptcy. Ms. Young, the White House budget director, had exchanged proposals on federal spending caps with negotiators deputed by Chairman Kevin McCarthy, whose Republican party refused to raise the country’s $31.4 trillion borrowing limit without major cuts.
Now, as she scrolled through Netflix looking for “bad television” to distract her racing mind, Ms. Young had a sinking feeling. What if she struck a deal to cut spending and raise the debt limit, only to see Republicans attempt much deeper cuts when it came time to pass annual appropriation bills this fall?
At work the next morning, Mrs. Young asked her staff how they could avoid this. They came up with a plan, which would essentially penalize the Republicans’ most cherished spending programs if they failed to follow the outlines of the agreement. They then forced Republicans to include that plan in the bill that codified the deal.
That approach reflected a broader strategy that President Biden’s team followed in negotiating the debt limit, according to interviews with current and former administration officials, some Republicans and other people familiar with the talks.
In pursuit of a deal, the Biden team was prepared to deliver one win after another to Republicans on political talking points, where they realized Mr. McCarthy had to sell the bill to his conference. They eventually got Mr. McCarthy’s team to argue that the deal included sweeping budget cuts, massive recoveries of unused federal coronavirus aid money and strict job requirements for federal aid recipients.
But in the details of the text and the many side deals that came with it, the Biden team wanted to win substantively. With one major exception — a $20 billion cut in enforcement funding for the Internal Revenue Service — they believe so.
As government officials see it, the full final deal cuts are nothing worse than they anticipated in regular appropriations bills passed by a divided congress. They agreed to structure the cuts to appear to save $1.5 trillion in a decade in the eyes of the impartial Congressional Budget Office. But thanks to the side deals — including some accounting tricks — White House officials estimate that the actual cuts could be just $136 billion over the two enforceable years of the spending caps at the heart of the deal.
Much of the $30 billion in recovered Covid-19 money would likely never be spent, Biden officials say, including dollars from an airline industry jobs program that had essentially ended.
At one point in the talks, government officials offered to include more than 100 utilities in the deal from which they were willing to withdraw money. The final list took up 20 pages of a 99-page bill, and Mr. McCarthy favored it on the House floor. But because much of the money was reused for other expenses, the net savings over two years were only about $11 billion. One of the programs had a remaining balance of only $40.
Many Democrats remain outraged that the deal included new job requirements that could keep 750,000 people off food stamps, which the Biden team reluctantly concluded it had to accept.
That measure alone could have undermined Democratic support for the deal in Congress, officials knew. So they tried to counterbalance with efforts to expand the eligibility of food stamps for veterans, the homeless and others, which the Republicans agreed to do. The budget office concluded that the changes would actually add recipients to the program, on the Internet.
Some Democrats and progressive groups have sharply criticized Mr Biden for negotiating the debt limit in the first place, denouncing the cuts and job demands and saying he reaffirmed the Republicans’ ability to bail out the loan limit when a Democrat enters the White House. busy.
Republican negotiators sold the deal as a groundbreaking blow to Mr Biden’s spending ambitions. “They definitely have tire marks on them during these negotiations,” Louisiana Representative Garret Graves said before the House vote on Wednesday.
Mr Biden sees it differently. As the Senate prepared to approve the agreement Thursday night, he huddled with his chief of staff, Jeffrey D. Zients, in Mr. Zients’ office in the west wing of the White House. Mr. Biden asked Mr. Zients what you might call a scorecard question: What percentage of Democrats in the House had voted for the deal and what share was expected in the Senate?
When Mr. Zients told him that the number of Democrats in both chambers would exceed the proportion of Republicans supporting the deal, Mr. Biden was delighted. According to him, it was confirmation that he had made a good deal.
Mr. Zients referred to that vote share in an interview on Friday. “If you go back a few months ago, no one would have thought this was possible,” he said.
It was not a guaranteed result. The negotiating teams came to the table with differing views on the causes of the federal debt in recent years. White House negotiators blamed Republican tax cuts. Republicans blamed Mr Biden’s economic agenda, which included a debt-funded Covid relief bill in 2021 and a bipartisan infrastructure bill later that year.
The dispute occasionally became profane. At one point, after Mr Biden’s negotiators criticized the 2017 Republican tax cuts, a “very soft-spoken” aide to Mr McCarthy stood up, shook his finger at the Biden team and vehemently replied that their argument was nonsense. was, using a vulgarity. said Mr. Graves.
Mr Biden has insisted for months that he would not negotiate raising the borrowing limit. But privately, many aides had scheduled talks all along — though they refused to admit that those talks were related to the debt limit. The Biden team reasoned that it should be negotiating fiscal issues this year anyway, both credit bills and programs such as food stamps included in a regularly reapproved farm bill.
Mr. Biden’s economic advisers, including Lael Brainard, the director of the National Economic Council, and Treasury Secretary Janet L. Yellen, warned of catastrophic damage to the economy if the government was unable to pay its bills on time.
The president appeared to be winning victories before talks began. He pushed Republicans during his State of the Union address to agree that Social Security and Medicare would be off-limits in the talks — thanks to a candid riff that spawned a passage in his speech he had worked on extensively. in the days before. He proposed a budget filled with tax increases on the wealthy and corporations designed to reduce debt, but refused to engage Mr. McCarthy in serious talks until Republicans offered a spending plan of their own.
In late April, the House passed a bill that included $4.7 trillion in savings from spending cuts, canceling clean energy tax breaks, and reclaiming money for Covid relief and the IRS. the debt limit for one year.
Mr Biden, under fire from business groups and others who feared the deadlock could lead to the United States running out of money before raising the debt limit, quickly agreed to appoint a team of negotiators. The White House team was led by officials, including Ms. Young and one of her top aides, Michael Linden, who delayed his departure from the White House to join Louisa Terrell, the legislative director of affairs, and Steve Ricchetti, White House counsel. House to help negotiate. president.
Mr. McCarthy’s negotiators gave Biden officials the impression that in order to reach an agreement, they needed at least one talking point from every major aspect of the House’s Republican debt reduction bill.
The conversations took some surprising turns. Multiple White House officials say the Republican team has briefly made relatively modest proposals to increase tax revenue, including closing loopholes that benefit some property owners and those who trade cryptocurrency. Those discussions soon fizzled out.
Democrats agreed to accelerate construction of a natural gas pipeline, with officials admitting to fulfilling a promise made to Sen. Joe Manchin III, the West Virginia Democrat, for supporting the climate bill Biden signed last year.
The spending caps came in roughly where many Biden aides predicted in private conversations months ago. Few White House officials believed they would have to give up $20 billion of the $80 billion that Democrats approved last year to help the IRS crack down on tax evasion. Mr Biden hammered out the amount in a final conversation with Mr McCarthy.
Ms. Young said that cut was painful. “And not just for me,” she added. “It’s something we’ve talked to the president about many times. He cares a lot about this.”
On Thursday evening in Mr. Zients’ office, the president and his team focused on positives. They had beaten back Republican efforts to scrap the climate law, to add new job requirements to Medicaid recipients, and to impose binding spending caps for a decade. Mr. Biden was especially pleased that key veterans’ programs could be cut.
On Friday morning, Mr. Zients assembled key officials in his office, as he had done every day, seven days a week, for several weeks. Ms. Brainard and the economics team were relieved to have removed the threat of default not only for this year, but also in the next presidential election. Aides worked to refine Mr Biden’s planned remarks in an Oval Office speech on Friday night.
The speech began at 7:01 p.m., unusually fast for Mr. Biden. By this time, his staff was already celebrating. An hour earlier, happy hour had begun in Mr. Zients’ office.
Catie Edmondson reporting contributed.
