Debt Ceiling: Deal possible by end of week, McCarthy says; Biden cuts short upcoming foreign trip
Crucial debt ceiling negotiations are still far from success, but a deal is possible by the end of the week, Republican House Speaker Kevin McCarthy said after a brief meeting Tuesday with President Joe Biden and other congressional leaders at the White House.
Meanwhile, Biden is cutting short his upcoming foreign trip because of the looming debt limit crisis, adding urgency to the talks. McCarthy said one new development is that the president has "changed the scope" of who is negotiating in the staff conversations that have been slow-going over the past week.
"It is possible to get to a deal by the end of the week," McCarthy told reporters.
Tuesday's meeting was pivotal as negotiators were staring down a June 1 deadline, which is when the Treasury Department says the U.S. could begin defaulting on its debts.
Biden is cutting short his planned trip to Japan, Papua New Guinea and Australia, set to begin Wednesday. He will still attend a G-7 summit in Japan but is canceling the later stops, according to three people with knowledge of the decision who were granted anonymity to discuss the unannounced decision.
Biden met with the congressional leaders in the Oval Office.
"We're just getting started," Biden he said in brief remarks to reporters, while others in the meeting — Vice President Kamala Harris, Senate Majority Leader Chuck Schumer, D-N.Y., House Minority Leader Hakeem Jeffries, D-N.Y., and Senate Minority Leader Mitch McConnell, R-Ky. — sat soberly.
Biden will still attend the Group of Seven summit in Hiroshima, Japan, as planned but canceled the later stops ould cancel the later stops. Kirby noted that Biden will already have met with some of the leaders of the so-called "Quad" — the purpose of the Australia leg of the visit — while in Japan, even as he cautioned that no final decisions have been made.
"We wouldn't even be having this discussion about the effect of the debt ceiling debate on the trip, if Congress would do its job, raise the debt ceiling the way they've always done," Kirby said.
While Biden has remained upbeat that "we'll be able to do this," McCarthy has prodded the president to move faster and has been far more pessimistic on the state of the talks. He and other Republicans are demanding budget cuts in exchange for their support for raising the debt ceiling. Biden insists the two issue must not be linked.
"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."
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 appeared 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.
But congressional 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. The White House remains opposed to changes in requirements for recipients of Medicaid and food stamp programs, although it is more open to revisions for beneficiaries of the Temporary Assistance for Needy Families cash assistance program.
The idea of imposing more work requirements was "resoundingly" rejected by House Democrats at a morning caucus meeting, according to one Democrat at the private meeting and granted anonymity to discuss it.
Progressive lawmakers in particular have raised the issue. Rep. Pramila Jayapal, the chair of the Congressional Progressive Caucus has raised concerns but not yet spoken directly to Biden about the issue.
We want to make sure that these negotiations do not include spending cuts, do not include work requirements, things that would harm people, people in rural areas, black, brown, indigenous folks," Jayapal said Tuesday.
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 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.
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 estimates are unchanged on the possible "X-date" when the U.S. could run out of cash.
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.