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Key sticking points, possible trade-off areas in the debt ceiling showdown

After signs of at least gradual progress, high-stakes negotiations to avoid a disastrous default came to an abrupt halt on Friday, with an impasse over proposed spending cuts a key sticking point.

House Republicans said they were taking a break from talks, citing the White House’s “unreasonable” stance – a major issue that comes with an ever-shorter timeframe for lawmakers to reach a deal or risk a default.

The White House said the two sides faced “real differences” on spending, but it still believed a bipartisan deal was “possible”.

Split image showing President Joe Biden speaking to reporters in the Roosevelt Room of the White House in Washington on May 9, 2023, and Speaker of the House Kevin McCarthy speaking at a press conference on Capitol Hill after having met at the White House with President Biden about the debt ceiling, on May 16, 2023, in Washington.

Kevin Lamarque/Reuters and Jacquelyn Martin/AP

The apparent collapse comes as opposing factions increased pressure on both left and right, raising questions about whether, even if a deal were struck, it would have enough support to pass Congress.

The House Freedom Caucus, a group of hardline conservatives, on Thursday urged Republicans to stop “any further discussion” and move forward with their partisan Limit, Save, Grow legislation.

On the other side of the aisle, progressive Democrats seem to fear that the negotiations could lead to Biden giving in too much to Republicans. A group of Senate Democrats, led by Independent Senator Bernie Sanders, have called on Biden to use the 14th Amendment – which says “the validity of public debt…shall not be questioned” – to unilaterally increase the debt ceiling.

As the nation heads toward default possibly as early as June 1, here’s a look at what’s been on the table in the negotiations.

Spending limits

Sources familiar with the talks told ABC News’ Rachel Scott that the issue of spending caps has emerged as one of the biggest sticking points in the negotiations.

“Look, we can’t spend more money next year. We have to spend less than the year before. It’s pretty easy,” House Speaker Kevin McCarthy said Friday, repeating a red line Republican during the confrontation.

The House budget bill would reduce 2024 discretionary spending to 2022 levels and limit federal spending growth to 1% per year for a decade. Biden’s budget proposal, by contrast, proposed a 9.4% increase in discretionary spending and 1% annual increases for a decade.

Even though the Republican plan to raise the debt ceiling — tied to spending cuts — doesn’t specify exactly where the cuts would come from, the White House has claimed that returning to 2022 levels would mean a 22% reduction in programs. in everything from cancer research to education to veterans’ health care.

Here’s how much the United States spends on health care, the military, and education.

Work requirements

Another thorny aspect of the negotiations is the Republican plan to toughen work requirements for recipients of government assistance, including Medicaid and SNAP food assistance, which progressive Democrats strongly oppose.

Biden earlier this week opened the door to adding some requirements, but insisted they would be of “no consequence.”

“I will not accept any work requirements that will impact people’s medical needs,” he said.

McCarthy laughed off Biden’s comments, telling a press conference, “Anything with consequences? It was the senator who voted for the job demands.”

Energy for Reform

One area of ​​possible compromise was the acceleration of energy permit approvals to facilitate development.

But the two parties are considering different reforms: Democrats seek to accelerate renewable energy projects while Republicans seek to increase gas and oil production.

Unspent COVID-19 relief money

Biden also said he was willing to consider recovering some $30 billion in untapped pandemic-related aid — another provision of the GOP’s Limit, Save, Grow Act.

“We don’t need everything, but the question is what obligations have been made – commitments made, money not disbursed?” he said after his first meeting with congressional leaders on May 9.

Rachel Scott, Lauren Peller, Gabe Ferris, Lalee Ibssa, Katherine Faulders, William Steaking, Trish Turner, Allison Pecorin and ABC News’ Molly Nagle contributed to this report.

ABC News

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