WASHINGTON, May 15 (Reuters) – President Joe Biden and Republican House Speaker Kevin McCarthy prepared for critical talks on the debt ceiling on Monday, with just over two weeks to go before the US government runs out of money would come to pay her debts. bills.
Democratic and Republican aides were at work trying to reach agreement on spending levels and energy regulations ahead of a Tuesday at 3 p.m. EDT (1900 GMT) between Biden, McCarthy and the three other top congressional leaders.
The White House has not ruled out annual spending caps that Republicans say should accompany a $31.4 trillion increase in the US debt limit.
Republicans, who control the House, have said they will not vote to raise the debt ceiling unless Democrats agree to major cuts. Failure to lift the cap — a measure needed to cover the cost of spending and tax cuts previously approved by Congress — could trigger bankruptcy that would trigger a sharp economic downturn.
But McCarthy said he saw little sign of progress ahead of the meeting with McCarthy, Senate Democratic leader Chuck Schumer, Senate Majority Republican Mitch McConnell and House Democrat Hakeem Jeffries, which comes the day before Biden will challenge Washington. leave to attend a Group Meeting. of seven nations gathered in Japan.
“They’re not doing well at all. There’s no progress that I’m seeing, and it really worries me about the timeline of where we are,” McCarthy said, speaking to reporters about the talks. “We have big problems to solve, and you have to get through the House and Senate, and there’s definitely not enough progress to see that.”
When asked if Biden should leave for Japan without a debt ceiling deal, McCarthy told reporters, “Look, I think a US president should focus on America’s solutions. And I think it shows your values and priorities .”
Biden made no public comments on Monday about the state of negotiations, after telling reporters on Sunday that he thought both sides wanted to reach a deal. “I think we will succeed,” he said.
Biden’s trip will leave little time for the two sides to reach a deal before the US runs out of money to pay its bills, which Treasury officials say could come as early as June 1.
A first-ever US bankruptcy would plunge the country into recession and create chaos in global financial markets, economists say, and the impasse is beginning to worry investors and consumers.
![US President Joe Biden is in talks with congressional leaders about debt limits at the White House in Washington](https://cloudfront-us-east-2.images.arcpublishing.com/reuters/PG7SDPRYJRLLJBRJT2XCIQZGJU.jpg)
[1/2] U.S. House Speaker Kevin McCarthy (R-CA) speaks to reporters for the West Wing following debt limit talks with U.S. President Joe Biden in the Oval Office at the White House in Washington, U.S., May 9, 2023. REUTERS/Kevin Lamarque /File Photo
BUDGET TALK
Biden has urged Congress to increase the country’s borrowing capacity without conditions, but the White House also says it is willing to discuss budget matters with House Republicans.
“Our expectation is that Congress will do what is necessary even as we continue to have parallel discussions on the budget,” Lael Brainard, head of the White House National Economic Council, told CBS on Sunday.
Republicans are under pressure from former President Donald Trump, who said they should allow the country to default unless all their demands are met.
“Better now than later,” he wrote on social media. Three times during the Trump presidency, lawmakers have raised the debt limit, a step Congress routinely has to make to cover the cost of spending and tax cuts it previously approved.
House Republicans passed legislation in April linking a $1.5 trillion debt ceiling increase to a $4.8 trillion budget cut, largely achieved by cutting annual discretionary spending by 8% next year and cap the growth in the coming years.
Democrats say they will not agree to other elements of that legislation, such as a withdrawal of Biden’s attempted student loan forgiveness and an increase in job requirements for some benefit programs.
But they don’t rule out spending limits.
Republican Representative Don Bacon, a leading centrist, told reporters Friday that a deal could potentially require a 2% annual increase, rather than the 1% specified by the Republican bill.
The White House and Republicans could agree to relax licensing requirements for pipelines and other energy infrastructure — though that would take time to legislate, said Brian Riedl, a fellow at the conservative Manhattan Institute.
The longer it takes the two sides to reach a deal, the smaller it is likely to be, he said. “The playing field will shrink because you don’t have time for broader policies,” he said.
Reporting by David Morgan and Jeff Mason; writing by Andy Sullivan; Edited by Cynthia Osterman