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Debt ceiling debate: Rep. Cuellar is 'confident' on a deal

Rep. Henry Cuellar (D-Tx.) joins Yahoo Finance Live to discuss the debt ceiling and whether a deal will be in place by June 1, how this situation compares to 2011, and the possibility of a spending cut.

Video transcript

AKIKO FUJITA: They are focused on the debt ceiling talks there, House Speaker Kevin McCarthy sending Republican negotiators back to the White House today, but he says they are still hitting a snag over spending. Yet he did say he's optimistic a deal can be made before the deadline. Joining us now is Congressman Henry Cuellar, Democrat from Texas. Congressman, it's good to talk to you today. You've got JPMorgan and Chase now coming out and saying that the chances of the US going past that ex date are at 25%. How optimistic are you that a plan will be in place, a deal will be in place come June 1st?

HENRY CUELLAR: You know, I really think we can work something out before June 1st. If you recall, the last time we were in this type of situation that happened in 2011, we got close, but if you recall what happened, the US credit was downgraded because we waited too long to work something out. But again, it's I feel confident that we'll work something out. People have to give in on both sides. And I feel confident that at the end of the day, you'll have people on the far right, the people on the far left are not going to be happy. And we've got to get both Democrats and Republicans in the middle to be able to get this done and vote and pass it successfully.

SEANA SMITH: Congressman, it's Seana. Thanks so much for being here. You mentioned what we saw back in 2011. You obviously had a front row seat to that. How did the talks, how does the sentiment today compare to what we saw 12 years ago?

HENRY CUELLAR: It's always the same type of playbook. And look, with all due respect to my colleagues on the other side of the party, when Trump was there, Trump added-- Congress-- I'll say Trump-- under the Trump administration, about $7.8 trillion in four years. And we raised the debt ceiling three times. And nobody said anything. And then as soon as there's a president of a different party that all of a sudden, the hibernation cycle changes. People wake up, and all of a sudden, they talk about debt.

So it's the same type of playbook that we saw in 2011. And it's a way of using leverage to get certain things and certain priorities that our Republican colleagues want, but again, I feel confident that we'll be able to work something out. And again, the far left and the far right might not be happy, but a lot of us in the middle, both Democrats and Republicans, will make sure that we govern at the end of the day.

AKIKO FUJITA: It certainly feels like the sticking point here comes down to a spending cut versus a spending freeze. Based on discussions that you've had with your Democratic colleagues, a spending cut, is that something that you'd support?

HENRY CUELLAR: Well, look, I got my own ideas, but I certainly want to give the flexibility to the president and to our leader, Hakeem, to be able to go and negotiate. And again, I'll be willing to work with whatever they can negotiate in a bipartisan way with our Republican colleagues. But keep in mind, I hope we don't go into what we did in 2011 when we had that sequestration, we had automatic cuts, and it was very difficult. I think that flexibility should be left to Congress when we decide what is given priorities and what is not-- should get that level of funding. But I think we ought to leave it to Congress, instead of setting certain arbitrary cuts.

SEANA SMITH: Congressman, you said you had ideas. What are they?

HENRY CUELLAR: Well, again, you start off with the low hanging fruit, certainly claw back any of the unused monies that have now been used for COVID. There are some non-financial provisions like workfare. Some of those provisions, if somebody is able, single, in my opinion, is, they should get to work unless if you don't qualify because you are disabled or some sort of provision. The energy provision, it's something that we've been pushing, and I think that would be good for the economy also.

But then it gets down to go back to a 20-- the year 2022 level, which means $131 billion cut. And that means that you don't touch anything that deals with defense or veterans or Homeland Security. And that leaves a big-- very difficult spot for other things that are important to us like education and health care. So we got to make sure that we're going to be looking at working this out, that we put everything on the table and not come in with pre-set conditions, like our Republican friends want to do.

AKIKO FUJITA: There is an idea being floated out there about potentially delaying non-debt payments, so that essentially, you can go up to June 15 where you get the tax deadline, you get additional revenue that pushes you to a wider window here to negotiate potentially towards the end of the summer. Is that still a possibility? Is that still something that's being discussed right now?

HENRY CUELLAR: Well, you know, I prefer we don't go that way. Either we do a short suspension, which I know the Speaker has said he doesn't want to do that, but that would be one way to give us a little bit of time, or we reach an agreement, but when they talk about not paying this and doing this, it's, I mean, you know the drill. What we're talking about is that raising or suspending the debt for something that we agreed to do this. And a lot of this, keep in mind what happened-- under Trump, in four years, $7.8 trillion that had got added to the debt.

So the hibernation cycle changed. People woke up from the other party, and all of a sudden, debt is very important to them when they should have set something back four years, during the last prior four years. So, again, we want to make sure that we work something out. But they got to make sure that the more difficult part, I think it's going to be McCarthy because if he works something out, will the Freedom Caucus pull the trigger on him?

And you remember what happened when it took him 15 times to become Speaker. They put that where one member can ask that he be called back. So he's got a very difficult situation. And when he made that agreement to become Speaker, he left some landmines for situations like this. So he's in a difficult situation.

I think he can do it. I really think he can do it, and I want to wish all the parties success so we can work this out. We can do it. I don't-- we're not going to default. No matter how far left or how far right, people don't want to default, even though some people have ideas about priority payments and all that. I don't think we need to go into that route one way or the other.

SEANA SMITH: Congressman, one thing we did hear from the Speaker earlier today, we know both sides of the aisle have been pointing fingers at each other, but the Speaker blamed President Biden and the Democrats for coming to the table too late for these negotiations. What's your response to that?

HENRY CUELLAR: My response is that he is right in the sense, but it wasn't the Democrats. I think the fault were the Republicans. Where were the Republicans when they were in hibernation during the Trump administration, when we added $7.8 trillion and the debt got suspended, raised three times under the Trump administration? Why is it that people only wake up when there is a Democrat? We saw that in 2011, and we see the same playbook here.

So he can put the blame on it, but if he was really interested in the debt, he should have said something under Trump, and he did not. But now he's trying to use leverage, just like the Republicans did in 2011 against a Democratic president. They're doing the same thing with President Biden. So when he says that it was brought too late, he's right, but not on the Democrats. It's on the Republicans that were, with all due respect, were asleep or in hibernation back during the Trump administration, when we added $7.8 trillion to the debt.

AKIKO FUJITA: Well, we are certainly coming down to the wire here. Eight more days until that ex date. The Treasury Secretary has highlighted June 1st. Congressman Henry Cuellar, thanks so much for joining us today. I really appreciate the time.