WASHINGTON -- President Joe Biden is ready to discuss the debt ceiling with congressional leaders at the White House with reverberations across the globe as early outlines of a potential deal begin to emerge from painstakingly slow negotiations.
Raising the stakes, the Tuesday afternoon session comes as Biden is preparing to depart for the Group of Seven summit in Japan where the U.S. leadership will be on the world stage later this week. The president and House Speaker Kevin McCarthy are trying to strike a budget deal before the U.S. Treasury runs out of cash to keep paying the nation's bills, which could occur as soon as June 1.
While Biden has remained upbeat that “we'll be able to do this,” McCarthy is prodding the president to move faster. The Republican speaker says they need an agreement soon to avoid default. Expectations are low that a deal is imminent. It is more likely that staff talks will continue while the president is overseas.
“How much is too much?" McCarthy said Tuesday about the nation's $31 trillion debt load, as he pushed for stricter work requirements on government aid recipients as a way to cut spending.
McCarthy stopped short of suggesting Biden cancel his trip abroad. But he said at the Capitol, “We've got 16 more days to go, I don't think I'd spend eight days out of the country."
Biden was optimistic, saying over the weekend, “There’s a desire on their part as well as ours to reach an agreement."
It's the second time in a week that Biden has met with McCarthy of California and other congressional leaders at the White House. Biden is confronting a politically divided Congress for the first time on the debt ceiling, a test for both the president and McCarthy, the new speaker, as they work to stave off an economic crisis that could come from a federal default. The meeting will also include Senate Majority Leader Chuck Schumer of New York, Senate Republican leader Mitch McConnell of Kentucky and House Democratic leader Hakeem Jeffries of New York.
Even as the Democratic president and the Republican speaker box around the politics of the issue — with Biden insisting he’s not negotiating over the debt ceiling and McCarthy working to extract spending cuts — various areas of possible agreement appear to be emerging.
Talks have been under way at the Capitol for much of the past week, closed-door discussions where White House and congressional staff are discussing what it would take to craft a budget deal that would unlock a separate vote to lift the nation’s borrowing capacity to avoid a devastating default.
Among the items on the table: clawing back some $30 billion in untapped COVID-19 money, imposing future budget caps, changing permit regulations to ease energy development and putting bolstered work requirements on recipients of government aid, according to those familiar with the talks.
Democrats are growing concerned about the idea of putting new work requirements for government aid recipients on the table after Biden suggested he may be open to such changes.
Democratic leader Jeffries' staff sought to reassure them in talks late Monday, while a separate group of more centrist Democrats have signaled to their moderate Republican colleagues they are prepared to work something out to reach a debt ceiling deal, aides said Tuesday.
While McCarthy McCarthy has complained the talks are slow-going, saying he first met with Biden more than 100 days ago Biden has said it took McCarthy all this time to put forward his own proposal after Republicans failed to produce their own budget this year.
Biden has insisted Republicans must rule out default and consider budget issues separate from the need to raise the nation’s debt limit.
Though Biden did signal over the weekend that he could be open to tougher work requirements for certain government aid programs, the White House has indicated he is only referring to cash assistance programs and not food stamps or anything like Medicaid that would take away people’s health care coverage.
The debt limit must be lifted, as has been done countless times before, to allow continued borrowing to pay already accrued bills.
Compounding pressure on Washington to strike a deal, Treasury Secretary Janet Yellen said Monday that agency estimates are unchanged on the possible X-date when the U.S. could run out of cash — perhaps as early as June 1.
But Yellen, in a letter to the House and Senate, left some opening for a possible time extension on a national default, stating that “the actual date Treasury exhausts extraordinary measures could be a number of days or weeks later than these estimates.”
“It is essential that Congress act as soon as possible,” Yellen said Tuesday in remarks before the Independent Community Bankers of America.
In my assessment – and that of economists across the board – a U.S. default would generate an economic and financial catastrophe," she said.
Time is dwindling. Congress has just a few days when both the House and Senate are in session to pass legislation.
“It’s time for the principals to get more engaged, get their closers out there,” said Sen. John Thune of South Dakota, the Republican whip.
Details of a potential budget deal remain politically daunting, and it’s not at all clear they go far enough to satisfy McCarthy’s hard-right faction in the House or would be acceptable to a sizable number of Democrats whose votes would almost certainly be needed to secure any final deal.
Republicans led by McCarthy want Biden to accept their proposal to roll back spending, cap future outlays and make other policy changes in the package passed last month by House Republicans. McCarthy says the House is the only chamber that has taken action to raise the debt ceiling. But the House bill is almost certain to fail in the Senate, controlled by Democrats, and Biden has said he would veto it.
An increase in the debt limit would not authorize new federal spending. It would only allow for borrowing to pay for what Congress has already approved.
___ Associated Press writer Kevin Freking contributed to this report.
