Biden, McCarthy hold important meeting on debt ceiling as time to resolve deadlock gets shorter and shorter

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WASHINGTON (AP) – President Joe Biden and House Speaker Kevin McCarthy will meet at the White House at a crucial time as Washington strives to reach a budget compromise and raise the nation’s borrowing limit in time to prevent prevent severe federal default.

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Monday afternoon’s meeting between the Democratic president and the new Republican speaker will be crucial as they race to avert a looming debt crisis. After a weekend of negotiations began, both men appeared optimistic as they faced a deadline, shortly after June 1, when the government could run out of cash to pay the bills.

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Biden and McCarthy spoke by phone on Sunday while the president was returning home on Air Force One from the G7 summit in Japan. “It’s going well, we’ll talk tomorrow,” Biden said in response to a question shouted back on his return late Sunday.

The call revived the talks, and the negotiators met for two and a half hours at the Capitol on Sunday night, saying very little as they left. Financial markets turned bearish last week after negotiations stalled.

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

“I think we can make a deal,” Biden said at a news conference before leaving Japan.

The contours of a deal appear to be within reach, and negotiations have narrowed on the 2024 budget year limit that will be key to resolving the impasse. Republicans have insisted spending next year cannot be more than current levels in 2023, but Democrats have refused to accept the steeper cuts that McCarthy’s team first proposed.

A budget deal would usher in a separate vote to lift the debt ceiling, currently $31 trillion, to allow for more borrowing to pay bills already incurred. Finance Minister Janet Yellen said on Sunday that June 1 was a “deadline”.

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“We will continue to work,” Steve Ricchetti, an adviser to the president, said as the White House team concluded talks late Sunday.

McCarthy said after the phone call with Biden that “I think we can work around some of these issues if he understands what we’re looking at.” The speaker added: “But I made it very clear to him from the beginning. We have to spend less money than we did last year.”

McCarthy emerged from that conversation optimistically and careful not to criticize Biden’s trip as he had been. He was cautious, “No agreement on anything.”

Earlier, Biden used his closing press conference in Hiroshima, Japan, to warn Republicans in the House of Representatives that they must abandon their “extremist stance” on raising the debt limit and that there would be no deal on their terms alone to avoid a catastrophic default.

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Biden said “it’s time for Republicans to accept that no deal is made on their partisan terms alone.” He said he had done his part in an effort to raise the borrowing limit so the government could continue to pay its bills, by agreeing to significantly cut spending. “Now is the time for the other side to move away from their extreme position.”

GOP lawmakers have staunchly demanded drastic spending cuts with limits on future spending, rejecting alternatives proposed by the White House to reduce the deficit in part with tax revenue.

Republicans want to reduce next year’s spending to 2022 levels, but the White House has proposed keeping 2024 as it is, in the 2023 budget year. Republicans initially sought to impose spending caps in 10 years, although the latest proposal has narrowed that number down to about six years. The White House wants a two-year budget deal.

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A compromise on those top spending levels would allow McCarthy to serve conservatives, while not being so severe that it would eliminate the Democratic votes needed in a divided Congress to pass. pass any bill.

Republicans also want work requirements for the Medicaid health care program, though the Biden administration has countered that millions could lose coverage. The GOP also introduced new cuts to food aid by limiting states’ ability to waive job requirements in places with high unemployment. But Democrats have said any changes to job requirements for government aid recipients are unwise.

GOP lawmakers are also looking to cut IRS money and, by scrapping cuts for Defense and Veterans Affairs accounts, will shift most spending cuts to federal programs other states.

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The White House has countered by leaving defense and non-defense spending the same next year, which would save $90 billion in budget year 2024 and $1 trillion over 10 years.

All parties have noticed the potential of the package to include a framework to help speed the development of energy projects.

And despite a push by Republicans for the White House to accept parts of their proposed immigration overhaul, McCarthy said the focus is on the debt package and the budget previously approved by the House. .

Republicans have also rejected various White House revenue proposals, in which McCarthy personally asserted in conversations with Biden that the tax increase was indisputable.

For months, Biden has refused to participate in debt limit negotiations, arguing that Republicans in Congress are trying to use the vote on the borrowing limit as leverage to win concessions. government over other policy priorities.

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But with the potential June 1 deadline approaching and Republicans working on their own bill, the White House has kicked off negotiations on a budget deal that could come with an increase. debt limit.

McCarthy faces a hardline right-wing that is likely to reject any deal, which has led some Democrats to encourage Biden to resist any compromise with Republicans and just be himself. I raised the debt ceiling to avoid default.

However, the president said he is now ruling out invoking the 14th Amendment as a solution, saying it is an “unresolved” legal question that will be binding in court.

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Miller reported and Associated Press writer Josh Boak contributed from Hiroshima, Japan. Associated Press writers Farnoush Amiri, Colleen Long and Will Weissert contributed to this report from Washington.