WASHINGTON — The White House and congressional negotiators were closing in on a compromise agreement on Friday to raise the debt ceiling for two years, with just six days to go before the nation faces a grave threat of debt default.
In exchange for voting to raise the debt ceiling, House Republicans would achieve at least two of their highest priorities: Rolling back baseline federal spending in 2024 on most discretionary programs and rescinding some of the $80 billion allocated for the Internal Revenue Service as part of 2022’s Inflation Reduction Act, two sources with knowledge of the talks told CNBC.
That rescinded IRS money would then be used to cover much of the shortfall in domestic funding created by the GOP spending cuts, essentially preserving the programs while technically cutting the overall topline figure. The Pentagon and veterans health benefits would be spared from any cuts, and see their funding actually increase next year.
Details were still fluid on Friday morning, with two officials calling the IRS funding trade off “a live issue.”
Spokespeople for House Speaker Kevin McCarthy, President Joe Biden and Senate Majority Leader Chuck Schumer didn’t immediately respond to requests for comment on the emerging outlines.
But on its face, the could offer both parties a win. Republicans could claim, correctly, that they had secured a cut in baseline government spending for fiscal year 2024. Democrats, likewise, could say they preserved the vast majority of domestic programs at funding levels either equal to or just below their current ones.
This is a developing story, please check back for updates.