President Biden and House Speaker McCarthy to meet on debt ceiling as time to resolve standoff shortens

WASHINGTON DC — President Joe Biden and House Speaker Kevin McCarthy are set to meet at the White House at a pivotal time as Washington struggles to strike a budget compromise and raise the nation’s borrowing limit in time to avoid a devastating federal default.

Monday afternoon’s meeting between the Democratic president and the new Republican president will be crucial as they race to head off a looming debt crisis. After a weekend of start-stop talks, the pair seemed optimistic about a deadline, as early as June 1, when the government might run out of money to pay its bills.

Biden and McCarthy spoke by phone Sunday as the president returned home on Air Force One from the Group of Seven summit in Japan. “It went well, we’ll talk tomorrow,” Biden said in response to a shouted question when he returned Sunday night.

The call reignited talks, and negotiators met for 2½ hours at the Capitol late Sunday night, saying little as they left. Financial markets fell last week after talks stalled.

McCarthy, R-Calif., told reporters earlier Sunday that the call with Biden was “productive” and that recurring negotiations between his staff and White House officials focused on spending cuts.

Biden said at a press conference before leaving Japan, “I think we can come to an agreement.”

The outlines of a deal appear within reach and negotiations have tightened over a cap for the 2024 budget year that would be key to resolving the impasse. Republicans have insisted next year’s spending cannot exceed current 2023 levels, but Democrats have refused to accept the deeper cuts proposed by McCarthy’s team.

A budget deal would unlock a separate vote to raise the debt ceiling, now $31 trillion, to allow more borrowing to pay bills already incurred. Treasury Secretary Janet Yellen said on Sunday that June 1 was a “difficult deadline”.

“We will continue to work,” said Steve Ricchetti, adviser to the president, as the White House team left the talks on Sunday evening.

McCarthy said after his call with Biden that “I think we can work out some of these issues if he understands what we’re looking at.” The speaker added: “But I was very clear with him from the start. We need to spend less money than we spent last year.”

McCarthy emerged from that conversation with an air of optimism and was careful not to criticize Biden’s trip, as he had done before. He warned: “There is no agreement on anything.”

Earlier, Biden used his final press conference in Hiroshima, Japan to warn House Republicans that they must drop their “extreme positions” on raising the debt ceiling and that he will not there would be no agreement to avoid a catastrophic default solely on their terms.

Biden said “it’s time for Republicans to accept that there is no deal to be made only, only, on their partisan terms.” He said he had done his part by trying to raise the borrowing limit so the government could keep paying its bills, agreeing to major spending cuts. “Now it’s time for the other side to leave its extreme position.”

GOP lawmakers have stuck firmly to demands for deep spending cuts with caps on future spending, rejecting alternatives offered by the White House to cut deficits in part with tax revenue.

Republicans want to bring next year’s spending back to 2022 levels, but the White House has proposed keeping 2024 at the same level as today, in fiscal year 2023. Republicans initially sought to impose caps spending for 10 years, although the latest proposal reduced that number to about six years. The White House wants a two-year budget deal.

A compromise on those higher spending levels would allow McCarthy to meet conservative expectations, while not being so harsh that it would drive out the Democratic votes that would be needed for the divided Congress to pass any bill.

Republicans also want work demands on the Medicaid health care program, though the Biden administration has countered that millions could lose coverage. The GOP has further introduced further cuts in food aid by restricting states’ ability to waive work requirements in places with high unemployment. But Democrats have said any changes to work requirements for government assistance recipients are not valid.

GOP lawmakers are also seeking to cut money from the IRS and, by sparing the Defense and Veterans Affairs accounts from the cuts, would shift the bulk of the spending cuts to other federal programs.

The White House has responded by holding defense and nondefense spending flat next year, which would save $90 billion in fiscal year 2024 and $1 trillion over 10 years.

All parties are considering the possibility of the package including a framework that would accelerate the development of energy projects.

And despite pressure from Republicans for the White House to accept parts of their immigration overhaul proposal, McCarthy said the focus is on the debt and the budget previously approved by the House.

Republicans had also rejected various White House revenue proposals, with McCarthy personally insisting in his conversations with Biden that tax hikes were not an option.

For months, Biden had refused to engage in debt limit talks, saying Republicans in Congress were trying to use the borrowing limit vote as leverage to extract concessions from the administration on more money. other political priorities.

But with the potential June 1 deadline looming and Republicans putting their own legislation on the table, the White House has kicked off talks on a budget deal that could accompany an increase in the debt ceiling.

McCarthy faces a far-right flank that is likely to reject any deal, leading some Democrats to encourage Biden to resist any compromise with Republicans and simply raise the debt ceiling on his own to avoid default of payment.

The president, however, said he is ruling out the possibility, for now, of invoking the 14th Amendment as a solution, saying it is an “unresolved” legal issue that will be stuck in court.

The Associated Press contributed to this report.


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