President Joe Biden and congressional leaders said they were optimistic a bipartisan deal to raise the debt ceiling could be possible within days even as House Speaker Kevin McCarthy warned the two sides remained far apart after a meeting Tuesday at the White House.
(Bloomberg) — President Joe Biden and congressional leaders said they were optimistic a bipartisan deal to raise the debt ceiling could be possible within days even as House Speaker Kevin McCarthy warned the two sides remained far apart after a meeting Tuesday at the White House.
The meeting yielded agreement on a new system for staff-level negotiations, and lawmakers from both parties said they hoped to avert an unprecedented US default during the hour-long Oval Office meeting.
“There was an overwhelming consensus, I think, among the congressional leaders that defaulting on the debt is simply not an option,” Biden said in remarks following the meeting. But the president cautioned, “there’s still work to do.”
Biden also announced he had scrapped plans to visit Australia and Papua New Guinea following his travel Wednesday to Japan, so that the president can return to Washington in hopes of closing a deal. Biden said he plans to “speak regularly” with congressional leaders while in Hiroshima for the Group of Seven leaders summit, and meet with the group again upon his return.
In the interim, senior White House adviser Steve Ricchetti and budget director Shalanda Young will represent Democrats in staff-level negotiations, while Representative Garret Graves and aides to the speaker will join from the Republican side. McCarthy has agitated for narrower talks in recent days, and Ricchetti and Young have been key players in Biden’s negotiations with Capitol Hill on key legislative victories earlier in his first term.
“We’ve got a lot of work to do,” McCarthy told reporters. “It is possible to get a deal by the end of the week. It’s not that difficult to get to an agreement.”
Senate Majority Leader Chuck Schumer, for his part, said he was more optimistic than he had been after a meeting with the president and congressional leaders last week, while House Minority Leader Hakeem Jeffries praised an “open, honest, and cordial discussion.”
“The bottom line is that we all came to agreement that we were going to continue discussions,” Schumer said.
The gathering at the White House came amid signs negotiators were struggling to find common ground, with entrenched disagreements on the size and scope of concessions to raise the federal spending limit.
Failure to reach a deal will likely push the US over its debt ceiling as soon as next month, triggering a default that could rock global financial markets, raise borrowing costs for the government, companies and consumers and imperil an economic expansion that’s already begun to show signs of weakening.
Wall Street showed fresh anxiety Tuesday about Washington’s ability to raise the debt limit and prevent a historic default with both stocks and bonds falling. Yields rose across the US curve, with the rate on 30-year notes climbing to around 3.9% — the highest since the turmoil affecting regional banks that erupted in early March.
Read more: US 30-Year Yields Hit Highest Since Bank Turmoil: Markets Wrap
“We’re having a wonderful time. Things are going well,” Biden quipped at the beginning of the meeting.
The gathering was a key litmus test for talks amid dire warnings from Treasury Secretary Janet Yellen — who has said the US could default as soon as June 1 — that “time is running out” for a negotiated resolution.
Biden, who departs for Japan on Wednesday, will now return to the US on Sunday following the conclusion of the G7 meetings. McCarthy and other Republicans had called on Biden to scrap or cut short the travel plans.
“The nature of the presidency is addressing many of the critical matters all at once,” Biden said. But, he added, he was curtailing the trip “in order to be back for the final negotiation with the congressional leaders.”
Read more: Biden Drops Australia, Papua New Guinea Visit for Debt Talks
McCarthy earlier Tuesday held a closed-door meeting with fellow House Republicans, urging them to stick together on their demands, according to a person familiar with their discussion. He has said he hopes to have a deal in hand by the weekend, in an acknowledgement of the difficult legislative path any agreement could face considering the razor-thin GOP majority in the House.
Before the White House meeting, the House speaker publicly dug in on demands for sharp spending cuts and other priorities such as expanding work requirements for federal aid to the poor. Republicans are seeking to add new work requirements for Medicaid for “able-bodied” adults without children as well as apply existing work requirements to older individuals who receive food stamps.
Biden has rejected work requirements on Medicaid but otherwise avoided a definitive response.
“He will not accept proposals that take away people’s health care, health coverage,” White House Press Secretary Karine Jean-Pierre told reporters on Tuesday. “So that is incredibly important to the president, he’s been very consistent about that as he’s been having conversations with Republicans.”
–With assistance from Jordan Fabian, Billy House and Erik Wasson.
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