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 – House Speaker Kevin McCarthy said Tuesday after meeting with President Joe Biden and Democratic congressional leaders that he “hasn’t seen any new movement” to end a months-long impasse on raising the limit of debt of the nation. But he said they would meet again on Friday in hopes of avoiding a potential US default by the federal government.
Lawmakers and their staffs were expected to continue separate discussions as soon as Tuesday night on the annual federal budget at Biden’s encouragement, House Democratic Leader Hakeem Jeffries said, as Democrats signaled an openness to some spending cuts as long as they were disconnected from the threat by default.
“I asked the president this simple question, does he not think there is a place where we could find savings,” McCarthy told reporters outside the White House. “All I’m asking is that we spend the amount of money we spent five months ago.”
The high-risk Oval Office sitdown ended without any visible breakthrough, with the government likely to be unable to meet its obligations as early as June 1, raising the specter of economic chaos.
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.
As the president welcomed McCarthy, Jeffries, Senate Majority Leader Chuck Schumer and Minority Leader Mitch McConnell in the Oval Office for just over an hour, he joked to reporters: “We’re about to get started, solve all the problems of the world”.
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 categorically stated: “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 that the leaders themselves would meet again in person on Friday.
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 chasm between these opposing attitudes is fomenting the uncertainty that is shaking the financial markets and threatens to turn into a tidal wave engulfing the country’s economy. The meeting was scheduled to begin after the US financial markets close for the day.
McCarthy said Tuesday that a federal debt deal is needed within the next week if Washington is to meet the June 1 deadline, and said he sees no reason why both sides can’t quickly agree on Republican ideas to cut spending in exchange for raising the debt limit.
“I don’t think it’s that difficult,” McCarthy told reporters at the United States Capitol.
Biden and the Democrats don’t see it that way. The president insists that the debt limit increase is non-negotiable, with spending limits addressed separately as part of the annual budget process.
House Republicans recently 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.
Referring to the House bill, McCarthy said, “We both said default is not an option, but only one of us has acted.”
Expectations for a turnaround on Tuesday had been low.
The default, officials say, would have a sweeping impact, threatening to disrupt Social Security payments to retirees, destabilize global markets and plunge the nation into a potentially debilitating recession.
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.
Although Biden is traveling to the area to slam House Republicans, Lawler said in an interview Tuesday that he accepted an invitation from the White House — “perhaps to their surprise” — to appear alongside the president at Westchester Community College.
“He’s coming to my district, specifically to talk about the most pressing matter,” Lawler said.
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.”
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 contrast, the bill passed in the House with Republican votes would save $4.5 trillion through spending cuts, eliminating tax breaks for clean energy investments, and reversing Biden’s plans to reduce energy bills. student loan debt.
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.
“There is no plan B,” Bharat Ramamurti, deputy director of the National Economic Council in the White House, told CNN on Monday. “Our plan is for Congress to take action to address the debt limit, unconditionally.”
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.
Though memories of the 2011 debt-limit standoff — which also featured a Democratic president and a Republican speaker — remain fresh in Washington’s minds, aides to McConnell, the Senate GOP leader, have begun to point to a ‘other more recent battle as a more instructive example.
In 2019, then-President Donald Trump and Nancy Pelosi, the newly reinstalled Democratic House speaker, struck a broader tax deal that not only boosted the nation’s lending authority for two years, but staved off budget cuts. automatic budgets that both sides deplored.
McConnell pleaded with Trump at the time to negotiate directly with Pelosi and House Democrats, aides said — and the two sides were able to push back against the prospect of a debt default beyond Trump’s presidency despite political turmoil elsewhere.