WASHINGTON, May 16 (Reuters) – Democratic President Joe Biden and Republican top congressman Kevin McCarthy moved closer to a deal on Tuesday to stave off a looming US indebtedness as the threat of an economic nightmare led Biden this week to a trip to break down Asia.
After an hour of talking, McCarthy, the speaker of the House of Representatives, told reporters that the two sides remained far apart over an agreement to lift the debt ceiling. But he said: “It’s possible to do a deal by the end of the week. It’s not that hard to come to an agreement.”
Democrats were less than positive about a quick time frame, but the White House called the meetings “productive and direct.” Biden said leaders reached “an overwhelming consensus … that defaulting on debt is just not an option. Our economy would go into recession.”
“There’s still work to be done,” Biden said at a White House event honoring Jewish Americans, saying the parties were “on track to ensure America doesn’t default on its commitments for the first time.” debts”.
Biden said he was disappointed Republicans won’t consider ways to generate revenue. Raising taxes on the wealthy and corporations to help pay for programs for other Americans is an important part of Biden’s 2024 budget.
Biden met with McCarthy, Senate Majority Leader Chuck Schumer, Senate Republican Leader Mitch McConnell and House Democratic leader Hakeem Jeffries for about an hour after their aides met over the weekend to try to close a deal.
Republicans have refused to vote to raise the debt ceiling above the $31.3 trillion limit unless Biden and his Democrats agree to federal budget cuts. However, McConnell said after the meeting, “We know we won’t default.”
The US government could default on some debts as early as June 1 unless Congress votes to lift the debt ceiling, and economists fear the country will slide into recession.
Biden is “optimistic that there is a path to a responsible, bipartisan budget agreement if both sides negotiate in good faith and recognize that neither side will get everything they want,” the White House said.
Biden’s staff and congressional leaders have met several times over the past week on the matter. Going forward, talks will be limited for more engagement between House Republicans and the White House, McCarthy said.
Biden, who leaves for Japan on Wednesday, said he will speak regularly by phone with congressional leaders, and the White House said he would meet with them upon his return.
White House adviser Steve Ricchetti, budget director Shalanda Young and legislative adviser Louisa Terrell will lead talks for the administration, along with Republican Rep. Garrett Graves.
Rohit Kumar, a former senior McConnell aide who now co-leads PwC’s national tax office in Washington, said such direct negotiations have a proven track record. “It frees the administration to make some necessary concessions that will not be popular with Democrats in the House and Senate, but will also not jeopardize the passage of any agreement,” he said.
![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/CXQNGAUJ4JISREX2OXNTTZWATQ.jpg)
[1/4] US President Joe Biden hosts debt limit talks with Senate Majority Leader Mitch McConnell (R-KY), House Speaker Kevin McCarthy (R-CA), Vice President Kamala Harris and Senate Majority Leader Chuck Schumer (D-NY) in the Oval Office at the White House in Washington, US, May 16, 2023. REUTERS/Evelyn Hockstein
Neil Bradley, chief policy officer at the US Chamber of Commerce, welcomed the narrower scope and structure of the talks. “We believe there is a way forward in a bipartisan agreement that lifts the debt cap and implements important reforms to improve the fiscal health of our country,” he said.
Lingering uncertainty around the debt ceiling prompted Biden to skip stops in Papua New Guinea and Australia after attending a summit of the Group of Seven of the world’s richest countries in Hiroshima, Japan.
“We have a lot of work to do in a short amount of time,” McCarthy told reporters, who said the Oval Office session had set the stage for future talks.
WORK REQUIREMENTS
Prior to the meeting, sources said Biden’s and McCarthy’s aides discussed requirements for two major programs that provide food and cash assistance to families.
Expanding job requirements has been a key demand from Republicans, who are also pushing for spending cuts in exchange for their vote to raise the debt limit. McCarthy told reporters Tuesday that his party, which controls the House by a 222-213 margin, would only agree to a deal that cuts spending.
“We can raise the debt ceiling if we limit what we spend going forward,” McCarthy told reporters.
Both sides agree that urgent action is needed.
Over the past week, staffers from both sides have been discussing a range of issues. In addition to job requirements for some benefit programs for low-income Americans, spending limits and changes to energy permits have been proposed in exchange for votes to remove the limit, according to people briefed on the talks.
The sources, who spoke on condition of anonymity to reveal details of behind-closed-door negotiations, said talks about work requirements are focusing on the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, and the Temporary Assistance for Needy Families- program.
Biden alluded to the negotiations in public remarks over the weekend, saying he would not consider such a move for the Medicaid health program for low-income Americans.
PREVIOUS DOWNGRADE
A similar stalemate in 2011 over the debt limit led to a historic downgrade in the US credit rating, leading to a sell-off in stocks and higher borrowing costs for the government.
The current deadlock has upset investors, driving the cost of insuring exposure to US government debt to record highs. A Reuters/Ipsos poll completed Monday found that three-quarters of Americans fear bankruptcy will take a heavy toll on families like theirs.
Reporting by David Morgan and Jarrett Renshaw, additional reporting by Jeff Mason, Richard Cowan, and Moira Warburton; Edited by Scott Malone and Rosalba O’Brien