Full Episode: Washington Week full episode, May 19, 2023

John Yang: Debt ceiling talks take a brief pause, and DeSantis tries to outflank Trump on the right.

Janet Yellen, U.S. Treasury Secretary: The U.S. economy hangs in the balance.

John Yang: With less than two weeks until the federal government runs out of cash and defaults on its debts, Treasury Secretary Janet Yellen warns of dire consequences.

Unidentified Male: Until people are willing to have reasonable conversations, we`re not going to sit here and talk to ourselves.

John Yang: Republicans walk away from the talks only to say a few hours later they`d be back. The speaker says the framework of a deal must be in place by Sunday to give Congress time to pass it.

Plus, the trash talk between former President Donald Trump and Florida Governor Ron DeSantis heats up as the field for the 2024 Republican presidential nomination grows, next?

Good evening and welcome to Washington Week. I`m John Yang.

Talks on raising the debt ceiling took an unscheduled break today. In the morning, Republican negotiators abruptly walked away from the bargaining table, only to say this evening that they were going back. They said they had paused the talks because the White House hadn`t moved far enough in the Republicans` direction on spending cuts.

In the days before this, both House Speaker Kevin McCarthy and President Biden sounded optimistic. The president is monitoring develops 7,000 miles and 13 time zones away in Japan, where he`s attending the G7 Summit. The President is due back at the White House late Sunday night, earlier than it planned, and will be available to meet in person with the speaker.

The two sides are racing a deadline. They have to have a deal in time for Congress to pass it before the treasury runs out of money to pay for everything from Social Security and Medicare benefits to military salaries. That could be as early as June 1st.

Joining me to discuss this and more, Kayla Tausche, CNBC`s Senior White House Correspondent, and here in the studio, Fin Gomez, CBS News Political Director, Carl Hulse, The New York Times Chief Washington Correspondent, and Seung Min Kim, who covers the White House for the Associated Press.

Well, we`re just getting word that they`ve already broken for the night and there is no set time for another meeting. And some of the negotiators are sounding pretty pessimistic that they`re going to meet the weekend deadline for having something the framework in place.

Carl, I know you`ve seen a lot of these Capitol Hill negotiations. I don`t know if you`ve ever seen anything like this today, but do we have any idea or any sense about why the Republicans left and why they came back?

Carl Hulse, Chief Washington Correspondent, The New York Times: I think there`s a performative aspect to this. The Republicans, they need to show that they`re fighting for everything they can. The speaker is under pressure from the right. The Freedom Caucus, the hard right conservative element of the House Republican majority, has already said they won`t vote for anything until the Senate approves the House bill, which, of course, won`t happen. But I do think there`s -- so, some of this is to show, hey, we`re tough.

This is how congressional negotiations go up and down, up and down. But there are some real differences and how you cap the spending, what spending exactly you cap, how long those caps go. The contours of the deal are there but getting the details is hard, and I think that`s what they`re doing right now. But they`ve got a few days still to work it out and we`ll have to see what happens.

John Yang: Kayla, what are they saying at the White House and how big a complication is it to have the president 13 time zones away so he`s ending his day as talks begin?

Kayla Tausche, Senior White House Correspondent, CNBC: Well, John, it certainly overshadowed any big picture conversations and publicity the White House hoped to garner back home for big picture issues, like Ukraine and like China, because this is all anyone is talking about. And his aides are briefing him around the clock.

And when he holds his press conference in the early morning hours on Sunday morning East Coast time, this is all the reporters are going to be asking him about, is whether he`s spoken to House Speaker Kevin McCarthy, what his aides are telling him about whether there`s a deal and what the path forward is once he returns to Washington.

When I spoke to White House officials today, they were unbowed by what the Republicans were doing, walking out of the meetings and suggesting that the administration was being unreasonable. They said, look, the president understands that the GOP also has an issue with its whip count. The GOP can`t deliver this deal on its own and they need to understand that in order to get Democratic votes that the administration has to deliver on some of its priorities, too.

This official telling me they can`t get everything they want, and so both sides are sort of -- they`re hurrying to their farther out wings, as Carl was just mentioning, but at the same time, the White House seems to be acknowledging, look, this is going to be a deal that`s made in the center, and that`s where we`re going to stay.

John Yang: Seung Min, this is a deal that not everyone is going to be happy with, but we`ve heard President Biden`s red lines, the things that he will not give in on. Any idea, any sense of what the White House is willing to give on and maybe what the Republicans are willing to give on?

Seung Min Kim, White House Reporter, The Associated Press: So, one interesting element that`s really caused ripples, especially among Democrats this week, is the issue of these tougher work requirements for some federal aid programs, such as SNAP, which is that food stamps program, and TANF, which is the Temporary Assistance for Needy Families.

I was actually traveling with President Biden over the weekend at his beach home in Rehoboth Beach, Delaware, and we asked him in the middle of his bike ride, he did come over and talk to the press, we asked him about these updates on the debt negotiations. And I asked him, would you be open to tougher work requirements on some of these federal aid programs, which is what Republicans have demanded?

And, surprisingly, he said yes. He`s noted that he had voted for tougher laws that were in place now as part of that welfare reform bill back in 1996. He says Medicaid is a red line for him. He`s not going to do anything that gets rid of anyone`s health care coverage. But on the other issues, he said, look, let`s see what the Republicans have got.

And that caused a lot of concern on Capitol Hill this week, particularly among progressive lawmakers who really want to protect these programs as much as possible. It`s that dynamic that we`ve discussed earlier that no matter what deal it is, there will need to be a lot of Democratic votes. So, you can`t give too much on Democratic priorities.

But I will say that President Biden has been asked this multiple times since Sunday and he keeps saying over and over that he is open to some changes depending on what they are. He wants to hear from Republicans first.

So, in terms of a possible compromise on what kind of give the White House can give on Republican priorities, that`s that. But, certainly, they are worried about freezing spending levels for a long period of time. That`s not something that they will agree to that Republicans are demanding. There are some other kind of more out there demands, like I know some conservative Republicans are asking to add their border bill to the debt limit. That`s not going to happen.

So, just look at some changes to potential federal aid programs and then look at how long do you kind of set these spending levels and how low they go.

John Yang: Fin, Carl said that the Freedom Caucus, the ultra conservative Freedom Caucus probably won`t be happy with what comes out of these negotiations. And Seung Min said the progressives on the Democratic side probably won`t be happy. How do they pass this?

Fin Gomez, Political Director, CBS News: I think that`s a really great question. I think I don`t necessarily have that answer. But I will say there is so much drama here, John. It`s like a telenovela, frankly. And the President and McCarthy run the risk of inflaming the ire of the wings of both their respective parties, right? One Republican told me just before I got here that McCarthy is between Iraq and the MAGA base, right? And he is, because if he gives up too much territory politically, he can really face a backlash there.

And we are in a presidential cycle and he has a tenuous hold on that leadership. And that Freedom Caucus that we were talking about, they have ties to former President Trump and to that MAGA based electorate that we were talking about.

And just one other point that Carl brought up in his great piece today, but that in previous standoffs, when it implodes, it`s usually the party that`s in power, the power in charge of control of Congress, right? But this time around, per recent polling, there`s that Washington Post poll that came out, like both parties would share the blame and a lot of independents would be upset if this thing falls apart, John.

Carl Hulse: One thing to watch while we`re talking about that is can Kevin McCarthy keep a majority of his majority, that sort of the threshold where he has to be at and probably not face a challenge? The other big question is does the hard right just say we`re not going to vote for it and let it lie or do they attack the plan?

And then I will say, on the Democratic side, there is a lot of memories about Joe Biden`s negotiating on Capitol Hill, and they haven`t always been happy with what he`s come up with. And I think there`s some nervousness among people. It`s like Joe Biden, don`t give away the store, again,

Seung Min Kim: I think with all this talk about how angry will Republicans be, how angry will Democrats be, I kind of have, like, two basic rules of thumb for these bipartisan fiscal negotiation. One is that, which we saw today, there`s always a bad meeting before a good meeting.

And the second one is once there is a deal, if everyone hates it, it probably will pass because you have enough sort of people in the middle who know they have to do this for the goodness of the country, or for whatever reason, that you`ll have kind of the far planks of the right and the left reject it for their own ideological reasons. But if no one loves it, it probably has a good shot of passing.

John Yang: Carl, you were talking about Speaker McCarthy, and early in the week, you had a story in The New York Times talking about how McCarthy was just dying to get to go head to head with President Biden. Now that he`s got his wish, he`s doing it, how has this affected his standing, his stature, both inside the House and outside?

Carl Hulse: I mean, I think there was a perception among the Republicans and certainly among -- with Kevin McCarthy that he wasn`t being given credit for what he`s done so far. I mean, the expectations, honestly, for Speaker McCarthy were pretty low because he had to fight for the job, 15 ballots. But he`s managed to get some legislation through. It`s not going anywhere in the Senate, but he`s held his folks together and he wanted to get up there right with the president. He also wanted Chuck Schumer sidelined on the negotiations. The Republicans saw Schumer as a detriment to their cause. So, I think McCarthy is feeling pretty good right now, but he`s got a tough week coming.

John Yang: And Seung Min, on the other hand, on the Democratic side, the president, for a long time, said he was not going to negotiate with the debt ceiling as a threat hanging over his head, and as you say, there are worries that he`s going to give away the store. What is his standing in the party? What does this do to his stature?

Seung Min Kim: Well, right now, I mean, I think there are a group of Democrats that recognize that Biden, the president has to do what he can to avert a debt default while protecting priorities. But you have seen some anger from, again, progressive House Democrats this week that say this is precisely why you do not negotiate with someone, a group of people who are willing to hold something as serious as the debt limit hostage because then you kind of get pulled into negotiating over spending levels or how far the debt limit runs, like whether it goes past the election or on tougher work requirements.

But at the same time, the White House isn`t left with a lot of options here because they do not want to default. Democrats do not want to default. Some/most Republicans don`t want to default and because they know what the dire consequences would be. So, when they are afraid of those consequences, they are going to be willing to talk to them to see how you can avert that.

Now, I will say the White House continues to say that they`re not negotiating on the debt limit, that they are actually negotiating on the budget and spending and the debt limit just happens to be coincidentally happening. But we know in reality that`s not the case.

John Yang: He said that when he talked to reporters on Wednesday that the debt limit -- don`t worry folks, the debt limit is going to be raised, we`re dealing with these other issues, is that the way they look at it on the Hill?

Carl Hulse: No. Obviously that`s a distinction without a difference. They`re negotiating and Chuck Schumer has even said we`re negotiating on this. So, no, they`re not looking at it that way at all.

John Yang: Kayla, rather, at the White House, is anybody saying any privately aides wondering whether they might have underestimated McCarthy going into this?

Kayla Tausche: Well, that was certainly the takeaway, John. When McCarthy passed his bill a few weeks ago and was able to corral his caucus ever so slyly -- shyly to get that vote and get that bill across the finish line. I think that caught the White House flat footed because the president`s message up until that time had been I`ll show you my budget and you show me yours.

And he put out his budget in early March and had hoped that the. Republicans would not be able to get their act together to put an entire budget together. And while they never released a full budget plan, they did pass that bill. And when the White House was asked at that point repeatedly, okay, so is this a plan? Does the White House now need to respond? They said, no, that`s not a plan. It`s just a collection of policies. This is not a budget. We asked for a budget.

And it then became a very semantic argument, but it put the ball in McCarthy`s court. And when I talked to one of his aides and I said, what`s the status, how are you feeling going into these negotiations, right before the first meeting of the core four congressional negotiators and the president and his top staff, and they said, look, at this point, Senator McConnell, who`s a longtime friend of President Biden`s, I think there was some hope at the White House that perhaps McConnell would be the White knight. And McConnell said, I`m going to stand next to Speaker McCarthy, he needs to deliver his conference on this. And this McCarthy aide told me that`s the ballgame.

So, it really empowered the Republicans going into these negotiations, and they`re the ones who set the agenda with the topics and the items that they were willing to discuss in these negotiations. And now the White House is having to figure out where it stands and what it can get out of this and try to save face on messaging going forward, too.

John Yang: Fin could this -- however this turns out, however this comes out, could this affect the reelection, President Biden`s re-election bid? Could there be aftershocks from this that go all the way to 2024?

Fin Gomez: In a word, yes, especially if this blows back in Democrats and in the president`s face, essentially. But if it does, if it seems like he`s given too much ground again, and you`ve seen how the progressives are reacting to any sort of really fluidity with these negotiations, yes, he does have that. There is that risk. It`s still early, but, yes, absolutely.

Carl Hulse: Presidents are judged on the performance of the economy. It`s just one of those things, and even if you can`t control it and I think they`re worried about that. We don`t know what a default would look like, but we certainly think we know, and it`s not good for the economy.

John Yang: Well, his likely or the front runner for the Republican nomination spoke up today. Donald Trump said on Truth Social, Republicans should not make a deal on the debt sailing unless they get everything they want, including the kitchen sink. That`s the way the Democrats have always dealt with us. Do not fold.

Fin, you mentioned the Freedom Caucus, but does Trump bring any other Republicans along with him on this?

Fin Gomez: Well, I think the Freedom Caucus, they are directly tied to the former president, and I think they listen to that into the former president, especially going into this presidential cycle where he is he`s the clear front runner in this early stage of this cycle. So, absolutely, his words go a long way, and I think they will continue to. And despite Speaker McCarthy being the head of Republicans on Capitol Hill, he is still the de facto standard bearer of that party.

John Yang: Well, we`re going to be hearing a lot more from Donald Trump in the days to come. The field vying to challenge him in the Republican presidential nomination race is growing. Today, South Carolina Senator Tim Scott filed the necessary paperwork with the Federal Election Commission, and he says he`ll make what he calls a major announcement Monday in Charleston. And on Wednesday, Florida governor Ron DeSantis is suspected to say that he`s running.

In recent days, DeSantis and the current frontrunner, former President Donald Trump, have been exchanging increasingly pointed barbs. Trump mocked the governor after two DeSantis-backed candidates ended up losing in Tuesday`s elections. And on the other hand, The New York Times reported that DeSantis has privately told supporters that Trump can`t win in 2024.

Carl, what`s this race going to look like? Are they going -- these are two politicians whose careers have really been intertwined. They`re sort of playing in the same lane, going after the same voters.

Carl Hulse: And Trump would say he made Ron DeSantis his endorsement in the Florida governor`s race. It`s just going to be a very messy battle.

I think DeSantis might be happy that other people are jumping into this race, and it sort of might dilute a little bit of the Trump effect on him. I do think that`s interesting that other people have seen what`s happened, have seen how it`s gone with DeSantis, and still say, you know what, I`m willing to jump in there and take on the former president. I do think it`s just going to be a free for all, though.

And Donald Trump is really great at character assassination, and he`s going to apply those skills to Ron DeSantis.

John Yang: Could what DeSantis is doing, could it work, going after the same voters, sort of trying to be trying to be Trumpism without Trump?

Carl Hulse: Yes, I think that`s his message, right, Trump can`t win. I do think there`s a lot of Republicans in the Senate who also believe that and are worried about Trump.

I do think, though, that you`re going to see Trump use this feud that DeSantis has had with Disney against him and say, this guy is not good for business and try to scare away donors.

Fin Gomez: Sorry. Yes. DeSantis hasn`t even launched his campaign yet. As you said, it`s expected next week. And he`s lost momentum, though. He`s lost momentum over the last several weeks, over the last several months, in part because he has not engaged with Donald Trump. And some of his supporters have said, like jump in already, like counter, right?

So, I think that once that happens, I think after next week, I`ve been told by some folks in DeSantis world that that will increase, that he will get more vocal towards the former president, but it will turn this cycle, I believe, into a vicious one. It will be a brutal, brass knuckle cycle, and worse perhaps than we`ve seen since 2016.

John Yang: How will -- you say DeSantis is going to get more active. But what contrast will he try to draw with President Trump?

Fin Gomez: Well, frankly, he has been leaning into this card of being the best person to embody the Trump-era policies for the Republican base without having the Trump baggage. I think you`re going to see more of that. He`s been tweaking him, as we`ve seen. He`s been increasing it, increasing his criticisms.

But at the same time, because of that lack of momentum, as Carl touched upon, we have been seeing more potential contenders, say, even this past week, from the mayor of Miami to the North Dakota governor, to others saying they are considering seriously considering runs and jumping into the presidential freight. And a lot of that is because DeSantis has lost momentum over the last few weeks.

John Yang: So, that`s their hope there. That`s what fuels these sort of long shot candidacies, that`s how they think they could win?

Fin Gomez: Yes, that and in part because they`re still, despite of his positioning of Trump`s positioning as this frontrunner. And I think most national polls, there`s an average national polls, that show that he`s up by 30 points over DeSantis right now. But because there are still these looming investigations with Jack Smith and the others, Fulton County, that perhaps that this trajectory is not sustainable. And so the more they enter into the race, they feel they could they could change, it could evolve and they could get a chance. And, frankly, I think a lot of them are relying on that. We`ll see what happens.

John Yang: Turning to the Democratic side, Kayla, Vice President Kamala Harris` profile seems to be rising in recent days. Is there some strategy behind that?

Kayla Tausche: Well, in short, yes, John, because her profile had receded to behind the scenes. Her aides had complained that the issues with which she was tasked were low-profile issues and she was set up to fail essentially because they were issues that were not designed to succeed. Now, in recent weeks, she`s taken the helm of the administration`s messaging on abortion rights.

And in recent weeks, she`s also taken the lead on some debt ceiling strategy as well. She was in the meeting with congressional negotiators this week after not being in the meeting last week. She held a briefing for reporters yesterday talking about the consequences of default. And then even today, while she was visiting a philanthropic facility in California, she made comments that made news about the debt ceiling suggesting that giving some of the reasons behind the pause.

And so the White House has seemed to make a concerted effort to put her out there. And it`s because the attacks from the other side are expected to discuss President Biden`s age and the fact that Kamala Harris, the vice president, is just a heartbeat away from the presidency. And so her record is expected to come under attack just alongside the presidents. And they want that to be unassailable and they want her to be shown being in the lead, hand in glove with President Biden on a lot of these issues.

John Yang: The Republicans could be saying she could be president sooner rather than later, given the president`s age?

Kayla Tausche: Yes. I mean, that`s what they`re anticipating the message to be because of the attacks on President Biden`s age. And so they`re gearing up for that. And even just her appearances in President Biden`s ads and some of his high-profile events so far, it`s very clear that they`re raising her profile to show that she would be an able leader if anything were to happen to President Biden to try to nip those attacks in the bud even before they start.

John Yang: Seung Min, the campaign also released a strategy memo, and, interestingly, listed the states where they thought they can be competitive in 2024. Anything in that memo surprise you?

Seung Min Kim: It was really interesting how they specifically singled out North Carolina and Florida as two states where they will try to be active and play in as compared to the states, the swing states that they laid out that were so successful then back in 2020. Because if you look at the states, a lot of them are very familiar to us, such as Pennsylvania, Wisconsin, Georgia and Arizona clearly were pivotal states for the President in 2020 and also, frankly, in 2022 as well, in the midterms.

But North Carolina and Florida caught my eye. Florida, for us, when I started covering politics, Florida was a solid swing state. Now, it is clearly a red state considering, especially looking at Governor DeSantis` resounding re-election victory last November. But it is someplace where they see at least it`s worth investing money.

And in North Carolina is really interesting as well. It is a state where the demographics could be pretty ripe for Democrats to take that state again after losing it to Republicans the last couple of presidential cycles. And I do think that`s another state where abortion, which has been such a key issue in the midterms, we just saw the Republican-led legislature override Governor Cooper`s veto of, I believe, a 12-week abortion ban. And that issue is going to be really salient, really relevant for so many states, including so many swing states to come.

John Yang: Seung Min, you`ve got the last word because we have to leave it there. Thank you all for sharing your reporting with us and thanks to all of you for watching.

And join me back here tomorrow on PBS News Weekend for a look at how three native communities in Louisiana are fighting to save their tribal lands from rising sea levels.

I`m John Yang. Good night from Washington.