Race for US debt deal as talks go to the wire

Democrats and Republicans seemed within grasping distance Saturday of a deal to end the US debt ceiling standoff, with both sides playing hardball in the final race for an agreement to avert a potentially catastrophic default.

President Joe Biden gave the strongest sign yet on Friday night that the drama in Washington might be drawing to an end -- saying an agreement was "very close."

But midnight came and went, as Democrats reportedly drew a red line at Republican demands for tougher work requirements in exchange for social aid that they say would kill party support for a deal.

"I'm Catholic. Everybody wants to look for the white smoke. We're not at that stage yet," Republican negotiator Patrick McHenry told reporters in Congress late Friday night.

As talks resumed on Capitol Hill in the morning, congressional reporters quoted McHenry as saying the sticking points were down to a "very short list" and that a deal could be "hours or days" -- although negotiators still hoped to settle on a text Saturday afternoon.

Short of an accord allowing it to keep borrowing, the US government says it will run out of money to pay its bills on June 5 -- raising the cataclysmic prospect of a default that would likely trigger a recession and send shockwaves through the global economy.

The dreaded X-date is four days later than a previous estimate, but still guarantees that -- even with a deal this weekend -- it will be a frantic race to get it through the legislative hoops in Congress in less than 10 days.

Winning enough bipartisan support is certain to test the skills of party whips -- with loud grumblings already on both sides that too many concessions were being made.

The deal believed to be taking shape would include an agreement to extend the government's borrowing authority for two years, meaning no repeat of the current drama before the 2024 presidential election.

But Democrats would have to offer concessions on Republican demands for sweeping spending limits on social safety and other domestic programs -- most controversially a demand that those applying for benefits like food assistance work for them.

The White House has pushed back hard at such arguments, accusing Republicans of putting at risk "over eight million jobs unless they can take food out of the mouths of hungry Americans."

But the Republican leader of the House of Representatives, Speaker Kevin McCarthy, set the tone for Saturday's negotiations by reposting a clip of him telling reporters:

"I do not think it’s right that you borrow money from China to pay people to stay home that are able bodied with no dependents on the couch.

"That is not the American way. That is not what we believe."

Members of Congress left for a 10-day recess at the start of the long Memorial Day weekend -- with Biden himself, to the consternation of some in his own party, spending the weekend at his Camp David retreat, then his home in Delaware.

Economists have spent months raising the prospect of economic catastrophe should the government default, but both the White House and Republican leadership insist they are negotiating in good faith and are confident a deal will be reached in time.

McCarthy has said lawmakers will get 24 hours' notice if they are required to return to Washington for a vote.

The debt ceiling raise is an annual accounting maneuver that usually passes with little notice. It simply allows the government to keep borrowing money to pay for bills already incurred through the budget.

This year, the increasingly hard-right Republican Party has decided to turn the debt ceiling into leverage to force Biden to roll back favorite Democratic spending priorities.

Republicans call this taking responsibility for the $31 trillion national debt. The White House accuses the opposition party, which controls the House of Representatives, of taking the economy hostage.