Debt-limit negotiators will meet Tuesday morning in Washington as President Joe Biden and House Speaker Kevin McCarthy remained without an agreement to avert a catastrophic US default with time running short.
(Bloomberg) — Debt-limit negotiators will meet Tuesday morning in Washington as President Joe Biden and House Speaker Kevin McCarthy remained without an agreement to avert a catastrophic US default with time running short.
The two sides will meet at the US Capitol at 11 a.m. after pausing discussions late Monday.
McCarthy, who has pledged to speak daily with the president until a deal is reached, was back on Capitol Hill Tuesday, where all House Republicans will meet behind closed doors for a morning meeting.
He didn’t answer reporters’ questions on what he would tell GOP lawmakers or what to expect next in negotiations.
McCarthy and Biden met at the White House for more than an hour Monday evening in Washington. Earlier, Treasury Secretary Janet Yellen warned it’s “highly likely” her department would run out of sufficient cash in early June and that default could come as soon as June 1.
“The tone tonight was better than any other time we have had discussions,” McCarthy told reporters as he emerged from his meeting with the president. The two leaders, he said, “had a productive discussion. We don’t have an agreement yet.”
Biden, in a statement on Monday night, agreed that the session had been “productive.”
“We reiterated once again that default is off the table and the only way to move forward is in good faith toward a bipartisan agreement,” he said.
White House negotiators returned to the Capitol on Monday night and met for more than an hour. They left shortly after 11 p.m.
Early Tuesday, US stock futures fell 0.3%, while the dollar strengthened against a basket of major currencies for a second day. The yield on US two-year Treasuries rose to 4.38%, the highest since March 10.
The current standoff over the debt ceiling has the potential to put more strain on the US economy, which is already vulnerable to a recession after a series of interest-rate increases by the Federal Reserve, according to Bloomberg Economics.
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Republicans want to slash domestic spending over as many years as possible, while Democrats have offered slimmer cuts over a couple of years. Democrats also want to include defense spending limits in any agreement.
That sets up a key tension for hawkish Republicans, who want to increase the Pentagon budget at the expense of deeper cutbacks in social spending. McCarthy said defense cuts shouldn’t be on the table.
The California Republican said he would not waive a rule that allows House lawmakers 72 hours to review legislation before a vote. Conservatives have demanded the time but it adds to the pressure to get an agreement.
Rohit Kumar, Senate Republican Leader Mitch McConnell’s chief negotiator in the 2011 debt-limit crisis and now a principal in PwC’s Washington office, said the signals from the leaders coming out of the White House meeting are “a good sign for getting a deal” and that he sees a “more than 50-50” chance of an agreement emerging in the next couple days.
Even if it takes a little longer to complete, a default is unlikely after an agreement, he said.
“Once the deal is struck, Congress always finds a way to get it done by the deadline, and if they can’t get it done by the deadline, they extend the deadline,” Kumar added.
–With assistance from Erik Wasson, Jarrell Dillard, Steven T. Dennis, Anna Edgerton, Laura Litvan and Ana Monteiro.
(Updates with McCarthy arriving at Capitol, markets beginning with seventh paragraph)
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