WASHINGTON — President Joe Biden and House Speaker Kevin McCarthy are scheduled to meet Tuesday afternoon to discuss a way to break the logjam on the debt ceiling, with fears of a self-inflicted economic calamity growing as Republicans demand spending cuts.
Failure to reach an agreement to lift the borrowing limit threatens the first-ever default on the nation’s $31.4 trillion debt, an outcome that could prove catastrophic for the U.S. economy and upend the political landscape.
White House officials don’t expect any kind of completed framework from Tuesday’s meeting with congressional leaders, according to a source familiar with the discussions, and they aren’t bracing for any kind of agreement before Biden leaves for Japan on Wednesday.
There are potential areas of common ground that staff have identified in daily talks over the last six days, including permitting reform and the possibility of spending cuts on a parallel track to raising the debt ceiling.
And while Biden has said that cuts to federal aid that could throw Americans into poverty are off the table, the president has signaled that he may be open to concessions on work requirements in order to reach a spending deal.
“The work requirements on cash assistance that the president voted for in the 1990s are still the law today,” said a White House official in a statement. “As the President said, Medicaid is a different story, and the President has been clear that he will not accept proposals that take away peoples’ health coverage. The president has also been clear that he will not accept policies that push Americans into poverty.”
The official added, “He will evaluate whatever proposals Republicans bring to the table based on those principles.”
The White House expects staff-level talks will continue while the president is overseas, and he will be briefed daily while traveling.
Treasury Secretary Janet Yellen said in a letter Monday that the U.S. is still projected to exhaust all options to keep paying the country’s bills as early as June 1, leaving Congress with fewer than three weeks to avert a potential worst-case scenario.
“We just had our secretary say June 1 we could run out of money. We only have so many days left,” McCarthy, R-Calif., said Monday. “So, no, I don’t think we’re in a good place. I know we’re not.”
The letter serves as a reminder of the urgency of the situation but doesn’t change anything fundamental in how the White House is approaching the meeting Tuesday, the source familiar said.
The meeting among Biden, McCarthy and other congressional leaders was postponed from Friday; some lawmakers said they wanted to give staff-level negotiators more time to develop a framework for the principals to discuss.
Biden met with McCarthy, Senate Majority Leader Chuck Schumer, D-N.Y., Senate Minority Leader Mitch McConnell, R-Ky., and House Minority Leader Hakeem Jeffries, D-N.Y., last Tuesday. Since then, White House and Capitol Hill staffers have held private meetings to consider a path forward, but they’ve been tight-lipped about the details of the negotiations. It’s unclear how much progress they have made.
Vice President Kamala Harris is also expected to join Tuesday’s meeting, which is scheduled for 3 p.m. ET, according to a source familiar with her plans.
Schumer insisted Monday that default must “be off the table.”
“Speaker McCarthy must commit to the same,” he said. “The consequences of default are too terrible.”
Biden has been reluctant to characterize the talks while they’re ongoing but said last week he is “certain” default can be averted, and he remained hopeful over the weekend.
“I remain optimistic because I’m a congenital optimist, but I really think there’s a desire on their part as well as ours to reach agreement,” Biden said Sunday. “I think we’ll be able to do it.”
He didn’t respond when he was asked about his message for McCarthy.
The Republican-led House is demanding spending cuts and policy changes to lift the debt ceiling. Biden and the Democratic-controlled Senate insist that paying the bills is nonnegotiable and that next year’s budget should be dealt with separately.
With talks continuing and a deal not yet within reach, the timeline could throw into disarray Biden’s visit to Asia for meetings with his foreign counterparts.
Pressure to reach a deal is growing even as the two parties appear far apart.
A debt ceiling bill passed by House Republicans would cut the budget to fiscal year 2022 levels, slashing $131 billion from current spending. Democrats want to increase spending on health care, education and other domestic priorities, leaving the two sides to find other avenues for spending cuts; one possibility Biden and Republicans have floated is pulling back unspent Covid funds. Another possibility is reforms that would speed the process of getting permits for energy projects backed by the White House and centrist Sen. Joe Manchin, D-W.Va.
Still, Biden has continued to put pressure on Republicans, calling the looming default “a manufactured crisis” and insisting the responsibility falls on Congress to avoid it.
The White House has portrayed House Republicans as the only party to the talks willing to accept default as an outcome.
“Three of the four have said that we have to avoid default,” White House press secretary Karine Jean-Pierre told reporters Friday. “They’ve been very clear — we have to take default off the table. I will let you guess who was the fourth that did not say that.”