McCarthy Says Issues Remain in Debt Talks, All Won’t Be Happy

(Bloomberg) — Speaker Kevin McCarthy said issues remain in negotiations with the Biden administration on raising the federal debt limit as the clock ticks down to the point when the US Treasury runs out of cash.

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The two sides don’t yet have any plans for another negotiating session on Thursday, though that could change, said officials in both the White House and Republican camps.

McCarthy told reporters Thursday morning that the teams made “some progress” toward a deal on Wednesday. “There are still outstanding issues. I’ve directed our team to work 24/7 to solve this problem.”

The California Republican added, “I don’t think everybody is going to be happy at the end of the day. That’s not how this system works.” He declined to specify when or where the next round of negotiations will be. Speaking on Fox News, he said, “I don’t know if we have a deal today.”

Some financial markets are showing signs of stress as talks wear on. Treasury Secretary Janet Yellen has said her department could run out of cash as soon as June 1, and the following day sees a payment due to millions of Social Security beneficiaries, putting pressure on politicians to resolve the impasse.

A key money-market rate jumped, as lenders of cash appeared more skittish about making overnight loans backed by Treasury securities. Positive earnings news left US stocks higher.

Listen more: Unraveling the US Dance With a Debt-Ceiling Disaster (Podcast)

Fitch Ratings Wednesday placed the AAA credit rating for the US on watch for a potential downgrade. The US lost its AAA grade at S&P Global Ratings during a similar partisan standoff on the debt ceiling in 2011.

The White House and Treasury said the Fitch move demonstrated the urgency of reaching a speedy resolution to the standoff. But McCarthy said that he wasn’t worried about Fitch’s announcement, and that negotiators didn’t need the ratings agency to remind them of the importance of concluding a deal.

McCarthy didn’t specify what the sticking points are in the talks, but negotiators have been clashing over the scale and length of limits on spending to be included in a bill raising or suspending the debt ceiling. Economists have warned that even with a deal that avoids a devastating payments default, caps on government outlays could help to tip the US into a recession.

Read More: Modeling US Debt-Ceiling Risk as Talks X-Date Nears

The administration has also pushed back against Republican moves to expand work requirements for some recipients of federal assistance. A White House official on Thursday said both sides are dug in on the issue and the president is fighting policies that push Americans into poverty or take away their health care.

The two sides have made some progress, however. There is an emerging agreement to include a measure easing approval of power transmission lines, according to a person familiar with the negotiations.

Read More: Faster Energy Permits Being Eyed as Part of Debt-Ceiling Deal

With June 1 just a week away, any deal will need speedy action in both chambers of Congress in order to reach President Joe Biden’s desk in time. In the Senate, it could take agreement of all senators to speed past parliamentary hurdles that can add days to the debate.

One conservative GOP senator, Mike Lee of Utah, on Thursday morning threatened to prevent that from happening if a final deal isn’t to his liking. He tweeted that he will “use every procedural tool at my disposal to impede a debt-ceiling deal that doesn’t contain substantial spending and budgetary reforms.”

But he didn’t say whether he might slow down a temporary debt-ceiling extension if talks push past the deadline.

McCarthy told reporters he has been in touch with both his counterpart in the Senate, Republican leader Mitch McConnell, as recently as Wednesday and former President Donald Trump “the other day.”

Read More: Any Debt Deal Still Faces Time-Consuming Hurdles in Congress

–With assistance from Ryan Teague Beckwith, Akayla Gardner and Zach C. Cohen.

(Updates with no negotiating sessions planned in second paragraph)