WASHINGTON (AP) — President Joe Biden said a deal to resolve the government’s debt ceiling crisis seemed “very close” late Friday, even as the deadline for a potentially catastrophic default was pushed back four days until a week from Monday.

The later “X-date” threatened to open another week of frustrating negotiation between House Republicans and the White House over the risk of a default that could throw the U.S. economy into chaos and sap world confidence in the nation’s lleadership.

Yet President Joe Biden was upbeat as he left for the Memorial Day weekend at Camp David, declaring, “It’s very close, and I’m optimistic.”

With Republican at the Capitol talking with Biden’s team at the White House, the president said, “There’s a negotiation going on. I’m hopeful we’ll know by tonight whether we’re going to be able to have a deal.”

The new date, set out in a letter from Treasury Secretary Janet Yellen, came with Americans and the world concerned about U.S. brinkmanship.

In a blunt warning, Yellen said failure to act by the new date would “cause severe hardship to American families, harm our global leadership position and raise questions about our ability to defend our national security interests.” Anxious retirees were already making contingency plans for missed checks, with the next Social Security payments due next week.

The new deadline, a week from Monday, is four days later than earlier expected. Yellen said all “extraordinary measures” Treasury has resorted to would be exhausted.

Biden and Republican House Speaker Kevin McCarthy have seemed to be narrowing on a two-year budget-slashing deal that would also extend the debt limit past the next presidential election. After frustrating rounds of closed-door talks, a compromise had appeared to be nearing on Friday.

Republicans have made some headway in their drive for steep spending cuts that Democrats oppose. However, the sides are particularly “dug in” over McCarthy’s demands for tougher work requirements on government food stamp recipients that Democrats say is a nonstarter.

Earlier Friday, McCarthy said his Republican debt negotiators and the White House had hit “crunch” time, straining to wrap up an agreement with Biden as lawmakers broke for the long Memorial Day holiday weekend.

Any deal would need to be a political compromise, with support from both Democrats and Republicans to pass the divided Congress. Failure to lift the borrowing limit, now $31 trillion, to pay the nation’s incurred bills, would send shockwaves through the U.S. and global economy.

But many of the hard-right Trump-aligned Republicans in Congress have long been skeptical of Treasury’s projections, and they are pressing McCarthy to hold out.

The deal’s within reach, it just has to be agreed to,” said Rep. Patrick McHenry, R-N.C., one of the negotiators.

In remarks optimistic comments earlier at the White House before Yellen’s letter was released, Biden gave a shoutout to one of this top negotiators saying she’s “putting together a deal, hopefully.”

He was referring to Office of Management and Budget Director Shalanda Young who attended a salute to the Louisiana State women’s national basketball champions.

While the contours of the deal have been taking shape to cut spending for 2024 and impose a 1% cap on spending growth for 2025, the two sides remain stuck on various provisions. The debt ceiling, now at $31 trillion, would be lifted for two years to pay the nation’s incurred bills.

A person familiar with the talks said the two sides were “dug in” on whether or not to agree to Republican demands to impose stiffer work requirements on people who receive government food stamps, cash assistance and health care aid.

House Democrats have called such requirements for health care and food aid a nonstarter.

Asked if Republicans would relent on work requirements Graves, fumed: “Hell no, not a chance.”

House Republicans had pushed the issue to the brink, displaying risky political bravado in leaving town for the Memorial Day holiday. Lawmakers are tentatively not expected back at work until Tuesday, but now their return is uncertain.

“The world is watching,” said International Monetary Fund Managing Director Kristalina Georgieva after meeting Friday with Yellen. “Let’s remember we are now in the 12th hour.”

Weeks of negotiations between Republicans and the White House have failed to produce a deal — in part because the Biden administration resisted negotiating with McCarthy over the debt limit, arguing that the country’s full faith and credit should not be used as leverage to extract other partisan priorities.

“We have to spend less than we spent last year. That is the starting point,” said McCarthy.

One idea is to set the topline budget numbers but then add a “snap-back” provision to enforce cuts if Congress is unable during its annual appropriations process to meet the new goals.

On work requirements for aid recipients, the White House is particularly resisting measures that could drive more people into poverty or take their health care, said the person familiar with the talks, who was granted anonymity to describe behind-closed-door discussions.

Over the Republican demand to rescind money for the Internal Revenue Service, it’s still an “open issue” whether the sides will compromise by allowing the funding to be pushed into other domestic programs, the person said.

In one potential development, Republicans may be easing their demand to boost defense spending beyond what Biden had proposed in his budget, instead offering to keep it at his proposed levels, according to another person familiar with the talks.

The teams are also eyeing a proposal to boost energy transmission line development from Sen. John Hickenlooper, D-Colo., to facilitate the buildout of an interregional power grid.

Meanwhile, McCarthy is feeling pressure from the House’s right flank not to give in to any deal, even if it means blowing past the Treasury deadline.

McCarthy said Donald Trump, the former president who is again running for office, told him, “Make sure you get a good agreement.”

Watchful Democrats, though, are also pressing Biden. The top three House Democratic leaders led by Rep. Hakeem Jeffries spoke late Thursday with the White House.

McCarthy has promised lawmakers he will abide by the rule to post any bill for 72 hours before voting. The Democratic-held Senate has vowed to move quickly to send the package to Biden’s desk, right before next Thursday’s possible deadline.

Meanwhile, Fitch Ratings agency placed the United States’ AAA credit on “ratings watch negative,” warning of a possible downgrade.

The White House has continued to argue that deficits can be reduced by ending tax breaks for wealthier households and some corporations, but McCarthy said he told the president as early as their February meeting that raising revenue from tax hikes was off the table.

While Biden has ruled out, for now, invoking the 14th Amendment to raise the debt limit on his own, Democrats in the House announced they have all signed on to a legislative “discharge” process that would force a debt ceiling vote. But they need five Republicans to break with their party and tip the majority to set the plan forward.

They are all but certain to claw back some $30 billion in unspent COVID-19 funds now that the pandemic emergency has officially been lifted.

___

Associated Press writers Mary Clare Jalonick, Stephen Groves, Farnoush Amiri and videojournalist Rick Gentilo contributed to this report.

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NEW YORK (AP) — President Donald Trump reportedly must pay back more than $300 million in loans over the next four years, raising the possibility his lenders could face an unprecedented situation should he win a second term and not be able to raise the money: foreclosing on the leader of the free world.

But financial experts say the notion of Trump going broke anytime soon is farfetched.

Even with a total debt load across his entire business empire estimated at more than $1 billion, they note he still has plenty of assets he could cash in, starting with a portfolio that includes office and condo towers, golf courses and branding deals that have been valued at $2.5 billion.

Based on Forbes magazine estimates of the value of his buildings, for instance, selling his partial interests in just two properties— an office complex in San Francisco and a Las Vegas tower that houses a hotel and condos — could bring in $500 million alone.

And even if he doesn’t sell, that kind of valuation backing up the loans could make them easier for him to refinance.

“He’s going to be able to roll these loans over. They have collateral backing them up. They’re not that risky to the lenders,” said Phillip Braun, a finance professor at Northwestern University’s Kellogg School of Business.

Trump’s true financial picture has gotten renewed scrutiny in the wake of a New York Times report this week that he declared hundreds of millions in losses in recent years, allowing him to pay just $750 in taxes the year he won the presidency, and nothing for 10 of 15 years before that.

But the Times report was quick to note that tax filings alone can’t help determine someone’s net worth. And several experts told The Associated Press that, while the true state of Trump’s financial situation is unclear because of a lack of public information, he is probably not scrambling for money.

At issue is the often wide difference between what businesses report as profits and losses to the IRS and what they actually receive in profits they put in their pockets.

Plenty of real estate investors report big losses under tax accounting rules and pay little in federal taxes. That is because the tax code allows them to reduce their tax bills with myriad legal loopholes and breaks, including sometimes generous depreciation charges that reflect expected wear and tear on buildings.

Northwestern’s Braun said Trump’s minuscule tax payments don’t surprise him, nor do the losses claimed. “His accountants work really to make sure he doesn’t pay any taxes,” he said.

A better idea of how Trump is faring, Braun said, comes from Trump’s operating profits.

Forbes, which has been valuing Trump properties for decades for its annual billionaire issue, says Trump’s 40 Wall Street office tower generated $18 million in operating profits in 2019, Trump Tower $13 million, and Trump’s share in San Francisco’s 555 California Street tower $26 million.

According to Forbes’ latest valuation, even pandemic-reduced prices leave Trump with $2.5 billion worth of properties and other assets, and that is after subtracting his $1.2 billion in debt.

The Times said Trump’s real estate company has $421 million in loans he has personally guaranteed, with $300 million of that coming due over four years.

The Trump Organization did not immediately respond to an email and phone call requesting comment. Trump dismissed the Times story Monday as “fake news” and said he is “extremely underleveraged.”

“I have very little debt compared to the value of assets,” he wrote.

Among his lenders listed in his personal financial disclosure are New York-based commercial lender Ladder Capital, which is owed at least $110 million, and Bryn Mawr Trust Co. a suburban Philadelphia bank, which held Trump debt worth between $5 million and $25 million for Seven Springs, a New York estate owned by the Trump Organization.

Trump’s biggest lender on his disclosure is Deutsche Bank, his chief financier stretching back two decades. It helped him buy and fix up several buildings in New York and Chicago and his Doral golf club in Miami. It is owed at least $125 million, with loans coming due in 2023 and 2024.

One option for Trump is to get his lenders to refinance his debt or to take out a new loan. Deutsche Bank is an obvious candidate to help him with either because it has been so forgiving to him over the years.

Trump defaulted on bonds that the bank helped sell to investors to finance his casinos in Atlantic City, New Jersey, and a bank loan for his Chicago hotel and condo tower, and yet the bank has continued to lend to him.

Mike Offit, a former executive at Deutsche Bank who lent to Trump in the late ’90s, said that if a property backing a loan was still throwing off good cash, and all else was well, the easiest solution for a bank with a Trump loan not likely to be paid back would be to just push out the due date.

“If I was sitting at my old job and a Trump loan was coming due next year and he’s the president, I would just say let’s extend the maturity,” he said.

But several other real estate experts aren’t so sure Deutsche Bank may be willing to help Trump much any more.

The bank has been subject to money laundering and tax evasion investigations in Germany and the U.S., and last year settled with the U.S. stock market regulators for allegedly violating the Foreign Corrupt Practices Act by hiring relatives of government officials in Asia and Russia to drum up business for its investment banking division. In addition, its U.S. division had failed a few annual “stress tests” administered by the Federal Reserve in recent years, hampering its ability to lend for a while.

Deutsche Bank declined to comment.

Another problem: Not all Trump’s lenders are banks and other institutions that he can negotiate with across a table.

Nancy Wallace, a real estate professor at the University of California, Berkeley’s Haas School of Business, said that hundreds of millions of Trump’s bank loans have been packaged into bonds and sold to investors, and the banks are no longer in charge. If a borrower looks like it is in trouble, there could be less room to cut it a break.

Office buildings and hotels have also been hit especially hard by the lockdowns and travel restrictions. So lenders may not be eager to lend to Trump now, and selling off parts of his sprawling empire to raise cash won’t be so easy either, and is not likely to get him full value,

Still, “the real estate lending market is difficult at the moment, but for buildings throwing off cash? That shouldn’t be a problem,” said Bernard Kent, chairman at Schechter Investment Advisors in Detroit. “For something like Trump Tower, the future cash flow wouldn’t be tremendously affected by COVID-19 or people moving out of New York. Top-flight properties there tend to hold value.”

If all is lost, and Trump is really in trouble, some experts say there is another way he could raise money to pay off his lender: copy rocker David Bowie, who sold bonds that allow investors to make money off his music royalties.

“Trump Bonds” would enable investors to share in his future earnings from selling his name to, say, condo builders or purveyors of steaks or colognes or neckties.

“Trump has a brand that has value,” Kent said.

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“Despite a strong U. S. economy and a low unemployment rate, trouble, however, could be right around the corner. The fact of the matter is that it’s very difficult to improve upon an unemployment rate of 4 percent by generating sufficient job growth to push the unemployment rate below 4 percent.”
“Don’t overlook the fact that inflation has been picking up since the beginning of the year. According to the Bureau of Labor Statistics, the Consumer Price Index for all urban consumers, less food and energy, hit 2.4 percent in July 2018. That’s its highest reading since September 2008. While some inflation is good (the Fed typically targets 2 percent), more than that can be bad news according to Sean Williams of the Motley Fool.

Home sales are beginning to decline in key markets. Williams goes on to say that during the Great Recession, housing was a leading indicator of the trouble that lay ahead. It’s possible that we could be seeing similar warning signs (without insanely high mortgage default rates) this time around. “More specifically, in June 2018, we witnessed an 11.8 percent year over year decline in new and existing home and condominium sales in California, according to CoreLogic. California’s housing market is often a leading indicator to the industry as a whole. Seeing sales dip by a double-digit percentage should be a warning that Wall Street and investors pay attention to.”

Credit card debt and late payments are on the rise. A report released by credit reporting agency TransUnion as of February 2018 found that three key credit metrics were all heading higher. 1) The number of outstanding credit cards climbed from 364.2 million to 418.6 million between 2014 and 2) The average debt per cardholder increased from $5,329 in 2014 to $5,644 as of 2017. 3) The percentage of accounts that were delinquent 90 days or more had jumped from 1.48 percent in 2014 to 1.87 percent in 2017. As interest rates rise, servicing the debt will become more difficult, perhaps resulting in higher delinquency
rates that in turn can create a negative domino effect for companies behind those loans.

In closing, Williams goes on to say that “though averages alone don’t provide enough concrete evidence that a recession is near, they are another piece of a growing puzzle that implies a recession is closer than you probably realize.”

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