Biden is in talks with McCarthy’s congressional leaders

WASHINGTON – President Joe Biden and congressional leaders clashed over the debt limit impasse on Tuesday, ending their meeting without a breakthrough but agreeing to meet again this week to try to avert an impasse the risk of an unprecedented government default.

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 “doesn’t see any new movement” toward breaking the impasse.

Lawmakers and their staff were to continue debating the annual federal budget at Biden’s urging. Biden and congressional leaders will meet again on Friday.

After an hour-long discussion in the Oval Office, Biden said he was “absolutely confident” the country could avoid default, saying that defaulting on America’s obligations was “not an option.”

All the same, time is short. The government is hitting its legal borrowing limit and won’t be able to pay all of its bills by June 1 unless Congress agrees to raise the debt ceiling. This failure would push the country into default with wide-ranging economic consequences nationally and globally.

Republicans came to the White House hoping to negotiate broad cuts in federal spending in exchange for authorizing new borrowing to avoid a default. Biden, on the other hand, has reinforced his opposition to the country’s full faith and credit being held “hostage” in negotiations — while reaffirming his willingness to negotiate a budget only after default is no longer a threat.

“I told the leaders of Congress that I am ready to start a separate discussion of my budget, my spending priorities, but not under the threat of default,” Biden said.

Outside the White House, McCarthy said, “I asked the president this simple question: Does he not believe there is room for us to make savings?”

As the president welcomed McCarthy, House Democratic Leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and Minority Leader Mitch McConnell, he quipped to reporters, “We’re going to start solving all the world’s problems.”

Biden later described the tone of the meeting as “very measured and restrained,” adding, “There were a few statements from the speaker at times that were perhaps a little over the top.”

He was particularly vocal in his condemnation of what McCarthy called a lie by Democrats claiming that Republican budget cuts would hurt veterans.

Still, Biden added, “I believe Kevin will try to do what he says.”

There appeared to be at least some daylight between McConnell, who had let his House counterpart take the lead in negotiations and supported him ahead of the White House meeting, and McCarthy.

The head of the Senate said: “The United States is not going to default. Never has been and never will be.” However, the speaker simply said, “I did everything in my power to make sure we didn’t default.”

Democrats said there was an opportunity to “come together” on spending cuts as part of the budget process, but quickly jumped on McCarthy’s refusal to rule out a default, with Schumer saying the Republican “puts America in great danger.”

“To use the risk of default, with all the dangers that threaten the American people, as a hostage and say it’s my way or it’s not, it’s mostly my way or it’s not, it’s dangerous,” Schumer said.

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

While Biden has ruled out a default, he has also largely rejected attempts to unilaterally prevent it. He said he does not believe that invoking the 14th Amendment to the US Constitution, which states that the validity of the federal debt cannot be questioned, is a way out of the current impasse.

He added that White House lawyers would pursue the idea, but “the problem is that it will have to be tried in court.”

Before the meeting at the White House, both McCarthy and White House press secretary Karin Jean-Pierre insisted that averting a default would be simple – if the other side capitulated.

The chasm between these opposing positions has fueled uncertainty roiling financial markets and threatening to turn into a tidal wave that will engulf the country’s economy. The default, officials said, threatens to disrupt Social Security payments to retirees, destabilize global markets and push the country into a potentially debilitating recession.

Last month, House Republicans passed a sweeping spending-cutting bill, the first proposal in the negotiations. But the bill doesn’t stand a chance in the Democratic Senate, and the White House has threatened to veto it. Republicans hope the bill will save $4.5 trillion in deficits by cutting spending, eliminating tax credits for clean energy investments and reversing Biden’s plans to reduce student loan debt.

Referring to the House bill, McCarthy said, “We both said default was not an option, but only one of us took action.”

Already reviewing the meeting, Biden is scheduled to travel to Westchester County, N.Y., on Wednesday, where he plans to deliver a speech on how proposed spending cuts approved by House Republicans could hurt teachers, seniors and those in need of food assistance. assistance, and to veterans seeking medical care.

It’s part of a broader campaign by Biden to try to paint the Republican cuts as draconian. Aides believe the announcement both strengthens his position in negotiations with the Republican Party and helps him win re-election in 2024. His visit on Wednesday will take place in a district that Biden won in 2020 but is now represented by Republican Rep. Mike Lawler.

Because the Republican bill in the House of Representatives does not specifically spell out which federal programs will be cut, Democrats have warned of a sharp drop in popular programs. The Democratic group House Majority Forward announced a $1 million campaign Tuesday pushing for such cuts, while the House Republican Caucus countered with its own effort, portraying Democrats as “spending addicts.”

McCarthy said his group would take steps to increase funding for veterans regardless of their overall proposal. “First of all, cutting veterans is a lie,” he said.

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 calls for nearly $3 trillion in deficit reduction over a decade, mostly through tax hikes on the wealthy and changes such as allowing the government to negotiate prescription drug prices.

In response to McCarthy’s demand to return some of the unspent funds from his sweeping COVID-19 relief package, Biden said he would “take a hard look” at it regardless of the debt ceiling hike talks.

“We don’t need all of that, but the question is what commitments have been made, what money hasn’t been distributed, etc.,” Biden said, adding, “That’s on the table.”

Biden added that the debt limit must be raised “for more than a year so we can move forward.” The Republican House bill has raised the possibility of another fight over the government’s borrowing power in the midst of next year’s presidential election.

For now financial markets have begun to show some excitement, the business community has so far largely avoided supporting either side in the showdown and instead called for a deal.

“Securing a bipartisan path to raising the debt ceiling could not be more urgent,” said Josh Bolten, head of the Business Roundtable, a group that represents CEOs. “The cost of default, or even the threat of default, is simply too high.”

The U.S. Chamber of Commerce on Tuesday offered its own priorities for a quick deal, saying there are “no two better places to start than allowing reform and an agreement to contain spending.”

Biden’s refusal to negotiate the debt limit is evidenced by his personal experience in 2011, when he was Barack Obama’s vice president, and the administration made painful concessions to Republicans to avoid default. Biden told aides it was an experience he refused to repeat, not only for himself but for future presidents.

Notably, the administration has not ruled out a short-term increase in the debt limit that would align the deadline for an increase in federal borrowing authority with government spending negotiations, which must be resolved by Sept. 30.