President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy on Monday prepared for critical talks on the debt ceiling, with more than two weeks left before the US government runs out of money to pay its bills. .
Democratic and Republican staffers are working to find common ground on spending levels and energy regulations ahead of a 3 p.m. EDT (1900 GMT) Tuesday meeting between Biden, McCarthy and the other three leaders. who are congressional leaders.
The White House has not ruled out annual spending caps that Republicans say must accompany any increase in the $31.4 trillion national debt limit.
Republicans, who control the House, have said they will not vote to raise the debt ceiling unless Democrats agree to sharp spending cuts. Failure to lift the cap — a step needed to cover spending and tax cuts previously approved by Congress — could trigger a default that would trigger a sharp economic downturn.
But McCarthy said he saw little sign of progress ahead of a meeting with McCarthy, Democratic Senate Majority Leader Chuck Schumer, top Senate Republican Mitch McConnell and top House Democrat Hakeem Jeffries, which comes a day before Biden will leave Washington to attend a group. of Seven countries meeting in Japan.
“They’re not good at all. There’s no progress that I’ve seen, and it really concerns me with the timeline where we’re at,” McCarthy, speaking to reporters, said of the talks. “We’ve got big issues to get to, and you’ve got to get through the House and the Senate, and there’s certainly not enough progress to see that.”
Asked whether Biden should leave for Japan without a debt ceiling deal in place, McCarthy told reporters: “Look, I think an American president should focus on solutions in America. And I think it reflects your values and your priorities.”
Biden made no public comment on the state of the negotiations on Monday, after telling reporters on Sunday that he thought both sides wanted to make a deal. “I think we can do it,” he said.
Biden’s trip will leave little time for the two sides to reach an agreement before the U.S. runs out of money to pay its bills, which Treasury officials say is due as soon as June 1.
A first-ever US default would plunge the country into recession and inject turmoil into global financial markets, economists say, and the standoff is starting to worry investors and consumers.
Biden insisted that Congress should increase the nation’s borrowing capacity without conditions, but the White House said it was also willing to discuss budget matters with House Republicans.
“Our expectation is that Congress will do what is necessary even as we continue to have joint budget discussions,” Lael Brainard, head of the White House’s National Economic Council, said on “CBS Sunday.”
Republicans are facing pressure from former President Donald Trump, who has said they should allow the country to default unless all their demands are met.
“Better now than later,” he wrote on social media. Three times during Trump’s presidency, lawmakers have raised the debt limit, a step Congress often has to take to cover spending and tax cuts previously approved.
House Republicans passed legislation in April that paired a $1.5 trillion increase in the debt ceiling with $4.8 trillion in spending cuts, largely achieved by cutting annual discretionary spending by 8% in next year and capping growth in future years.
Democrats said they disagreed with other elements of that law, such as repealing Biden’s student loan forgiveness effort and increasing work requirements for some benefit programs.
But they did not reject the spending limits. Republican Representative Don Bacon, a leading centrist, told reporters Friday that a deal could call for a 2% annual increase, instead of the 1% set in the Republican bill.
The White House and Republicans could agree to ease permitting requirements for pipelines and other energy infrastructure — though it will take time to draft the legislation, said Brian Riedl, a fellow conservative. the Manhattan Institute.
The longer it takes the two sides to reach an agreement, the smaller it will be, he said. “The playing field narrows because you run out of time on broader policies,” he said.