Biden: Debt meeting ‘productive’, default ‘not an option’

Tuesday’s meeting at the White House was the first face-to-face confrontation between Republicans and Biden and Democratic congressional leaders on the issue.

WASHINGTON – President Joe Biden and congressional leaders spoke on the debt-limit impasse on Tuesday, ending their meeting with no breakthroughs but agreeing to meet again this week to try to avert the looming risk of a government default without previous.

Speaking at the White House, Biden described the talks as “productive” even as House Speaker Kevin McCarthy said after the high-stakes Oval Office meeting that he “didn’t see any new movement” to resolve the deadlock.

Lawmakers and their staffs were to continue discussions on the annual federal budget at Biden’s encouragement. Biden and congressional leaders will meet again on Friday.

After the hour-long discussion in the Oval Office, Biden said he was “absolutely certain” that the country could avoid a default, declaring that America’s failure to meet its obligations “is not an option”.

Yet time is short. The government is running into its legal limit on loans and won’t be able to pay all of its bills as soon as June 1 if Congress doesn’t agree to raise the debt ceiling. That failure would send the country into default with far-reaching economic impact at home and around the world.

Republicans have come to the White House hoping to negotiate sweeping cuts to federal spending in exchange for allowing new loans to avoid default. Biden, on the other hand, has strengthened his opposition to allowing the country’s full confidence and credit to be held “hostage” by the negotiations, while affirming his willingness to hold budget talks only after the default is not more of a threat.

“I’ve told congressional leaders that I’m ready to start a separate discussion on my budget, spending priorities, but not under threat of default,” Biden said.

Outside the White House, McCarthy said, “I asked the president this simple question: Don’t you think there’s a place where we can find some savings?”

As the president welcomed McCarthy, House Democratic Leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and Minority Leader Mitch McConnell, he joked to reporters, “We’ll get started, we’ll solve all the problems in the world.” .

Biden later described the tone of the meeting as “very measured and low-key,” adding, “Occasionally there would be a little exaggerated statement by the speaker.”

In particular, he disputed McCarthy’s branding as a lie, the Democrats’ claim that Republicans’ budget restrictions hurt veterans.

However, Biden added, “I trust Kevin will try to do what he says.”

There seemed to be at least some light between McConnell, who let his House counterpart lead the negotiations and supported him ahead of the White House meeting, and McCarthy.

The Senate leader said: “The United States will not default. He never has and never will.” The speaker, however, said simply, “I did everything in my power to make sure we didn’t fail.”

Democrats have said there is room to “unite” on spending cuts as part of the budget process, but quickly seized upon McCarthy’s refusal to rule out the possibility of default, with Schumer saying the Republican was “putting America is in serious danger”.

“Using default risk, with all the dangers it has to the American people, as a hostage and saying it’s my way or not, I’m mostly my way or not, is dangerous,” Schumer said.

McCarthy said Biden had directed his staff to continue the discussions and said the leaders themselves would meet again in person at the White House Friday.

While Biden has ruled out default, he has also all but rejected the attempt to unilaterally prevent it. He said he didn’t think invoking the 14th Amendment to the US Constitution, which says the validity of federal debt should not be questioned, was a solution to the current impasse.

White House lawyers will pursue the idea further, he added, but “the problem is that it should be challenged.”

Prior to the White House meeting, both McCarthy and White House Press Secretary Karine Jean-Pierre insisted it would be easy to avoid default, if only the other side capitulated.

The abyss between these opposing attitudes has fomented the uncertainty that is upsetting the financial markets and risks turning into a tidal wave that engulfs the country’s economy. The default, officials say, threatens to cut off Social Security payments to retirees, destabilize global markets and drag the nation into a potentially debilitating recession.

Last month, House Republicans passed a sweeping bill to cut spending, an opening offer in the negotiations. But that legislation doesn’t stand a chance in the Democratic Senate, and the White House has threatened to veto it. Republicans hope the bill achieves $4.5 trillion in deficit savings through spending cuts, eliminating tax breaks for clean energy investments and reversing Biden’s plans to reduce student loan debt burdens.

Referring to the House bill, McCarthy said, “We both said default is not an option, but only one of us has acted.”

Already looking beyond the meeting, Biden will travel to Westchester County, New York, on Wednesday, where he plans to give a speech on how proposed spending cuts approved by House Republicans could harm teachers, seniors in need of food aid, and veterans seeking health care.

It’s part of a larger campaign by Biden to try to paint Republican cuts as draconian. Assistants believe the message bolsters both his standing in GOP talks and his nascent 2024 re-election effort. His Wednesday visit will be to a congressional district won by Biden in 2020 but now represented by a Republican, Rep. Mike Lawler.

Because the House Republican bill does not specifically specify which federal programs would be cut, Democrats took offense by warning of major blows to popular programs. The Democrat-aligned House Majority Forward announced a $1 million campaign Tuesday to amplify those cuts, while the House Republican campaign committee responded with its own efforts by describing Democrats as “addicted to spending.”

McCarthy said his caucus will take steps to increase funding for veterans despite their blanket proposal. “First of all, cutting veterans is a lie,” she said.

While calling for a “clean” increase in the debt limit, Biden said he was open to discussions on how to reduce the federal deficit. His budget plan would reduce deficits by nearly $3 trillion over a decade, mostly through tax increases on the wealthy and changes like allowing the government to negotiate on the prices of prescription drugs.

In response to McCarthy’s request to recover some unspent funds from his vast COVID-19 relief package, Biden said he would “have a close look” at doing so regardless of talks to raise the debt limit.

“We don’t need everything, but the question is what obligations have been made, commitments made, money not dispersed, etc.,” Biden said, adding, “It’s on the table.”

Biden added that the debt limit would need to be raised for “more than a year, so we can move things around.” The House GOP bill has raised the possibility of another showdown over government lending authority in the heat of next year’s presidential election.

While the financial markets have started to show some jitters, the business community has thus far largely avoided backing either side in the showdown and instead called for a deal to be struck.

“Securing a bipartisan path to raising the debt ceiling couldn’t be more urgent,” said Josh Bolten, head of the Business Roundtable, a group that represents chief executives. “The cost of a default, or even the threat of a default, is just too high.”

The US Chamber of Commerce on Tuesday suggested its priorities for a quick deal, saying “there are no two better places to start than enabling reform and an agreement on spending limits.”

Biden’s refusal to negotiate on the debt limit is informed by his first-hand experience in 2011 when he was Vice President to Barack Obama and the administration made painful concessions to Republicans in an effort to avoid default. Biden told aides it’s an experience he refuses to repeat, not just for himself, but for future presidents.

Notably, however, the administration hasn’t ruled out a near-term increase in the debt limit that would align the deadline to increase federal lending authority with government spending talks that must be resolved by Sept. 30.

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