WASHINGTON, May 16 (Reuters) – Democratic President Joe Biden and top Republican Rep. Kevin McCarthy sat down on Tuesday to make progress on a deal to raise the U.S. government’s $31.4 trillion debt ceiling and stave off economic disaster.
They have some time to come to an agreement. The U.S. Treasury Department on Monday warned again that it may lack the money to pay all its bills by June 1, triggering a default that economists say could trigger a sharp economic downturn.
On Tuesday, House Speaker McCarthy told reporters that his party, which controls the chamber by a 222-213 margin, would only agree to a spending-cutting deal.
“We can raise the debt ceiling in the future if we control what we’re going to spend,” McCarthy told reporters.
Both sides agreed that urgent action was needed. A White House meeting on Tuesday that will include Biden, McCarthy, Senate Majority Leader Chuck Schumer, a Democrat, top Senate Republican Mitch McConnell and top House Democrat Hakeem Jeffries is scheduled to begin at 3 p.m. EDT (1900 GMT).
Over the past week, staffers from both parties have debated a range of issues, including spending caps, new work requirements for some benefit programs for low-income Americans and replacing energy in exchange for votes to raise the cap. In colloquialisms.
“Time is running out. Every day that Congress doesn’t act, we have higher economic costs that could slow the U.S. economy,” Treasury Secretary Janet Yellen told a group of bankers. “No time to waste.”
A similar 2011 stance led to a historic downgrade of the U.S.’s credit rating, which spurred a selloff in stocks and drove up the government’s borrowing costs.
The current stance has spooked investors, sent the cost of insuring US government debt to record highs, and a Reuters/Ipsos poll completed on Monday showed three-quarters of Americans fear a default on their families. .
“No one should use default as a hostage,” Schumer said in a Senate speech Tuesday. “The consequences would be catastrophic for America.
‘Too many cooks’
Some observers have expressed concern that the five-party talks are too far from progress.
No. 2 Senate Republican John Thune told reporters there appear to be “too many cooks.”
“As we’ve said all along, it’s Biden and McCarthy,” Thune said. “So people who can actually speak on behalf of the president need to come into the room and get McCarthy’s best people in there and do it.”
McCarthy himself said he wanted to talk one-on-one with Biden.
“If the president comes to an agreement, the Democrats in the Senate will vote on it. If we all agree, the House will pass it,” McCarthy said. “Why are we wasting so much time going around and around without solving any of the real problems? I think you’re putting the country at risk when you do that.”
Adding to the challenge of striking a deal, McCarthy agreed to when he took office as speaker earlier this year is a change in House rules that allows only one member to call for his ouster as chamber leader, giving more power to hardliners than the roughly three dozen members of the House Freedom Caucus.
Reporting by David Morgan and Jared Renshaw, additional reporting by Jeff Mason, Richard Cowan and Moira Warburton; Editing by Scott Malone and Rosalba O’Brien
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