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House Republican leaders on Thursday signaled that they were making progress toward a bipartisan deal with President Joe Biden to raise the debt ceiling, but warned that a potential agreement would require a level of compromise likely to disappoint both parties.

Speaking to reporters at the Capitol, House Speaker Kevin McCarthy said that negotiators had worked “well past midnight” and would continue to meet until they find a resolution to avert a default on the nation’s debt ahead of the projected June 1 deadline. But he said there are still “outstanding issues” holding up the negotiations.

“I don’t think everybody is going to be happy at the end of the day,” McCarthy said about members of his party worried he will make too many concessions in the final deal. “That’s not how this system works.”

At the same time, anxiety has been growing in some Democratic circles that Biden would go too far in accepting Republican demands. The two sides remain at odds over a GOP proposal to cut spending by imposing tougher work requirements for federal aid programs and introducing caps on future spending. Negotiators have been at an impasse over how much the federal government should spend next year and for how long to cap spending after that, with Republicans demanding a 1% cap on annual spending for six years while the White House has signaled it would agree to freeze discretionary spending next year and increase spending by 1% in fiscal year 2025.

Rep. Patrick McHenry of North Carolina, a key McCarthy ally who has been a part of the negotiations, said he does not expect a deal will be made on Thursday, adding that there are still “thorny issues” yet to be resolved. “We have legislative work to do, policy work to do,” he said. “The details of all that stuff really are consequential to us being able to get this thing through.”

As negotiators inch closer to an agreement, the contours of a possible deal have been slowly taking shape. The two sides have discussed a framework for an agreement that would claw back some $30 billion in untapped COVID-19 relief money and approve permitting reforms for energy development, according to those familiar with the talks.

Some hard-right Republicans, however, have expressed concern that McCarthy’s negotiators would retreat from the additional spending cuts they included in the House-passed debt limit bill last month, such as revoking Biden’s student loan forgiveness program and scrapping swaths of the Inflation Reduction Act. “That certainly doesn’t get me excited,” Rep. Chip Roy of Texas, a conservative member of the House Freedom Caucus, told reporters on Thursday. Biden and Democrats, meanwhile, have said those provisions are a non-starter and continue to push back on any attempt to undo their legislative accomplishments as part of a deal to raise the debt limit, accusing Republicans of holding the nation’s economy “hostage.”

Former President Donald Trump, who has said that Republicans should force a default if they do not get what they want from the White House, spoke with McCarthy on Thursday about the negotiations. “He was talking about, ‘Make sure you get a good agreement,'” McCarthy said of their brief conversation.

Even if McCarthy can get his members to sign off on a potential bipartisan deal in the House—no easy task with a slim majority of just five votes—any bill to raise the debt limit would then have to pass the Senate. Sen. Mike Lee of Utah, the conservative chair of the Senate Republican Steering Committee, said Thursday on Twitter that any deal McCarthy makes “will not face smooth sailing in the Senate” if it doesn’t include substantial spending and budgetary reforms, vowing to “use every procedural tool” available to him to delay a compromise bill.

Further complicating matters, a group of 35 House GOP members wrote a letter to McCarthy on Thursday afternoon urging him to hold the line on spending cuts while adding additional requests for the final bill, including border provisions and an end to funding for the FBI’s new headquarters. The letter signals that a compromise bill may fracture the unity McCarthy has created within his party since his marathon 15-round speakership vote.

But negotiators are in danger of running out of time. Treasury Secretary Janet Yellen has said the government might be unable to cover all its payment obligations as soon as next Thursday, and two prominent credit ratings agencies have warned that they could downgrade the U.S. government’s coveted AAA debt rating in the event of a default—an outcome that could result in higher interest costs.

Lawmakers are set to leave Washington on Thursday for the Memorial Day holiday without a deal, though talks are expected to continue into the weekend. Congressional leaders have instructed members to be on call to return for a vote should a deal be reached.

McCarthy has said that a deal must be reached this week to have enough time for legislation to pass through the House and Senate. Under legislative rules, House lawmakers have 72 hours to read the bill once the text is released, though that rule has been waived in the past.

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