House Speaker Kevin McCarthy said he had a productive debt ceiling discussion with President Joe Biden late Monday at the White House, but no agreement yet as Washington strains to strike a budget compromise and raise the nation’s borrowing limit in time to avert a potentially chaotic federal default . It’s a crucial moment for the Democratic president and the Republican speaker, just 10 days before a looming deadline to raise the debt limit.
As soon as June 1 the US could start running short of cash to cover its debts, a daunting situation. Secretary Janet Yellen Treasury said in a letter to Congress on Monday “it is highly likely” that the Treasury would be unable to pay all the nation’s bills. An unprecedented default would be financially damaging for many Americans and others around the world relying on US stability, sending shockwaves through the global economy.
“We both talked about the need for bipartisan agreement,” Biden said at the start of the meeting. The president said he was “optimistic we may be able to make some progress, because we both agreed default is not really on the table.” McCarthy said afterward they had a “productive discussion. We don’t have an agreement yet.” Ahead of the hourlong meeting, but both men said there remain disagreements. The White House chief of staff and top administration negotiators joined the session, as did McCarthy’s own chief of staff as well as a top Republican involved in the negotiations, Rep. Patrick McHenry of North Carolina, the Financial Services Committee chairman.
The contours of an agreement appear within reach, and the negotiations have narrowed to a 2024 budget year cap that would be key to resolving the standoff. Republicans have insisted next year’s spending cannot be more than the current 2023 levels, but Democrats have refused to accept the steeper cuts McCarthy’s proposed team and the White House instead offered to hold the spending flat.
A budget deal would unlock a separate vote to raise the debt ceiling, now $31 trillion, to allow more borrowing. Treasury Secretary Yellen said Sunday that June 1 is a “hard deadline.” McCarthy told reporters midday at the Capitol that “decisions have to start being made” since “we’re 10 days out” from the deadline. “We have to spend less next year than we spent this year,” McCarthy, R-Calif. reiterated and pointed to the House’s spending cuts as the “framework” for a deal. “I am hopeful,” he added.
After a weekend of start-stop talks, both Biden and McCarthy have declared a need to close out a compromise deal. Negotiators for the White House met again for nearly three hours Monday morning with McCarthy’s team at the Capitol ahead of the session at the White House.Biden and McCarthy spoke by phone Sunday while the president was returning home on Air Force One after the Group of Seven summit in Japan. “It went well, we’ll talk tomorrow,” Biden said in response to a shouted question upon his return late Sunday.
The call revived talks, and negotiators met for 2 1/2 hours at the Capitol late Sunday evening, saying little as they left. Financial markets turned down last week after talks stalled. “We’ll keep working,” said Steve Ricchetti, counselor to the president, as the White House team exited talks late Sunday.
McCarthy, R-Calif., told reporters earlier Sunday that the call with Biden was productive, and Biden told a press conference before departing from Japan: “I think that we can reach an agreement.” Bur McCarthy continued to blame Biden for having refused to engage earlier on annual federal spending, a separate issue but linked to the nation’s debt.
After the Monday morning’s three-hour session with the White House team, Republican negotiator McHenry told reporters: “We’re at a very sensitive point here, and the goal is to get something that can be legislated into law.” Over the weekend, Biden used his concluding news conference in Hiroshima, Japan, to say he had done his part by agreeing to spending cuts and to warn, “It’s time for Republicans to accept that there is no deal to be made solely, solely, on their partisan terms.” “Now it’s time for the other side to move from their extreme position,” he said.
GOP lawmakers have been holding tight to demands for sharper spending cuts with caps on future spending, rejecting the alternatives proposed by the White House that call for reducing deficits in part with new revenue from taxes.
McCarthy has personally insisted in his conversations with Biden that tax hikes are off the table Republicans want to roll back next year’s spending to 2022 levels, but the White House has proposed keeping 2024 the same as it is now, in the 2023 budget year. Republicans initially sought to impose spending caps for 10 years, though the latest proposal narrowed that to about six. The White House wants a two-year budget deal.