Some movement reported in debt limit talks as Biden cuts short overseas trip
President Joe Biden and congressional leaders struggled to find common ground on the debt ceiling during a Tuesday meeting, though lawmakers said afterward there was some progress toward a deal.
Biden and U.S. House Speaker Kevin McCarthy will become the two primary negotiators on a bipartisan debt limit bill that could include other items, such as caps on future government spending.
And Biden will return early from meetings with world leaders overseas, arriving in Washington, D.C. on Sunday “in order to be back for meetings with Congressional leaders to ensure that Congress takes action by the deadline to avert default,” according to a statement from press secretary Karine Jean-Pierre.
McCarthy said after the meeting Biden and the four lawmakers “set the stage to carry on further conversations,” telling reporters that a deal is “possible” by the end of this week.
McCarthy said Biden has designated administration officials to meet with the California Republican’s team, in a move he described as “productive.”
McCarthy said he’ll have Louisiana Rep. Garret Graves and members of his staff negotiating on behalf of Republicans, while the White House has designated budget director Shalanda Young and Steve Ricchetti, counselor to the president, as their negotiators.
“The structure of how we negotiate has improved, so it now gives you a better opportunity, even though we only have a few days to get it done,” McCarthy said.
“If this was where we were in February, when I first came (to the White House), I’d be very optimistic that this would get solved right away. The structure has changed, so we’re in a better process,” McCarthy later continued.
Senate Majority Leader Chuck Schumer, speaking in front of the U.S. Capitol, said Tuesday’s meeting was far more cordial and constructive than the previous meeting earlier this month.
Schumer said discussions about changes to the energy permitting process did come up as did work requirements for some safety net programs, though he didn’t get into specifics on either. Some progressive Democrats already have raised strong objections to any changes in work requirements.
“I’m not going to get into the details of those issues, but there are quite a bit of differences,” the New York Democrat said.
“We also understood the need to move with alacrity — that we only have a few days left, 11 days to be precise,” Schumer added, alluding to June 1 being the first day the government could default under a projection by the Treasury secretary. “And given the House and Senate procedures, we have to move very, very quickly.”
Republican leaders have been pressing for Democrats to agree to several conservative priorities, including spending cuts and enhanced work requirements on some federal aid programs, in exchange for the GOP addressing the debt limit.
Democrats have maintained they’re open to negotiations on federal spending during the annual budget and appropriations process, though they’ve said that should take place separately from the debt limit.
‘Economic and financial catastrophe’
The United States reached its debt limit in January, though serious negotiations on the country’s borrowing limit didn’t begin until earlier this month.
In the interim, the federal government has used accounting maneuvers called extraordinary measures to ensure the Treasury Department can continue paying all of the country’s bills in full and on time.
Those measures are limited and could be exhausted as soon as June 1 without a bipartisan agreement.
If that happens, the federal government would be limited to spending the amount of revenue that flows in during a given day or week, forcing a significant reduction in spending on everything from Social Security to military paychecks to funding to state governments to infrastructure projects.
Treasury Secretary Janet Yellen warned lawmakers in a Monday letter that the U.S. could default “by early June, and potentially as early as June 1.”
Yellen told the Independent Community Bankers of America at their 2023 Capital Summit on Tuesday morning that Congress must move quickly to avoid a default on the debt.
“Our current best estimate underscores the urgency of this moment. It is essential that Congress act as soon as possible,” Yellen said. “In my assessment, and that of economists across the board, a U.S. default would generate an economic and financial catastrophe.”
Yellen said she plans to update Congress again next week on when the U.S. would likely hit its x-date, at which point Treasury will no longer be able to pay all the nation’s bills.
If Congress doesn’t approve a bipartisan debt limit bill before then, Yellen said, the “economy would suddenly find itself in an unprecedented economic and financial storm.”
Biden cancels stops in Australia, Papua New Guinea
Biden is set to leave Wednesday morning to travel to Japan to attend a meeting of the G7, a group of world economies, though the White House on Tuesday canceled stops in Australia and Papua New Guinea that were scheduled to take place after the G7 wrapped up.
Jean-Pierre said in a statement that Biden “has made clear that members of Congress from both parties and chambers must come together to prevent default, as they have 78 times before.”
“The President and his team will continue to work with Congressional leadership to deliver a budget agreement that can reach the President’s desk,” she added.
The U.S. Senate is scheduled to be on recess next week for its Memorial Day break, before returning to Capitol Hill on May 30. The U.S. House is set to be out on its Memorial Day recess that week.
Following the debt limit meeting Tuesday, McCarthy declined to detail discussions on changing work requirements for some government safety net programs, including food assistance and health care programs, as a condition for raising the debt ceiling. But McCarthy said Republicans are still pushing for measures that passed in the House.
Regarding rescinding unspent COVID-19 relief funds, McCarthy said, “I think at the end of the day it will be in the bill.”
Senate Minority Leader Mitch McConnell, a Kentucky Republican, said the negotiations “shouldn’t be this hard.”
“Number one, we know we’re not going to default. They know it, we know it,” McConnell said. “We’re running out of time, and finally, as the speaker has pointed out, the president’s agreed to designate somebody to lead.”
The White House said in a readout of the meeting that Biden “emphasized that while more work remains on a range of difficult issues, he’s optimistic that there is a path to a responsible, bipartisan budget agreement if both sides negotiate in good faith and recognize that neither side will get everything it wants.”
“The President directed staff to continue to meet daily on outstanding issues,” the White House said. “He said that he would like to check in with leaders later this week by phone, and meet with them upon his return from overseas.”