Biden, McCarthy to hold key meeting on debt ceiling as time runs out to resolve impasse

WASHINGTON (AP) — President Joe Biden and House Speaker Kevin McCarthy are set to meet at the White House at a key juncture as Washington scrambles to raise the nation’s debt ceiling to avoid a budget compromise and a messy federal default..

White House negotiators returned to the Capitol on Monday ahead of an afternoon meeting between the Democratic leader and the new Republican speaker. That will be crucial as they race to avert a debt crisis as soon as next week.

After a weekend of start-and-stop talks, the two appeared upbeat as they faced a June 1 deadline.When the government has no money to pay its bills.

On Monday morning, McCarthy took a sharp edge, accusing Biden of refusing to engage in annual federal spending, a separate issue but related to the nation’s debt.

“What we need to do here is stop spending slavery,” McCarthy, R-Calif., told reporters when he arrived at the Capitol.

“With the Democrats and the president refusing to even negotiate, no family can operate this way,” he said. “That’s why we go from crisis to crisis.”

As McCarthy has said many times before: “We’re going to spend less than last year.”

The terms of the deal appear within reach, and negotiations have narrowed on the 2024 budget year deadline, which is critical to resolving the impasse. Republicans have insisted that next year’s spending be no higher than the current 2023 level, but Democrats have refused to accept the steep cuts originally proposed by McCarthy’s committee.

A budget deal would open a separate vote to raise the debt ceiling, now at $31 trillion, to allow more borrowing to pay bills already incurred. Treasury Secretary Janet Yellen said Sunday that June 1 is a “hard deadline.”

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Rep. Patrick McHenry, the top negotiator for the Republican Party of North Carolina, told reporters that a round of talks late Sunday went “reasonably well.”

“We know the deadline, we know the challenge,” said McHenry, who chairs the House Financial Services Committee. “People work in good faith.”

But he said: “All this is difficult.”

“We will continue to work,” said Steve Ricchetti, an adviser to the president, as the White House team walked out of the talks late Sunday.

Biden and McCarthy spoke by phone as the president returned home on Air Force One after the Group of Seven summit in Japan on Sunday.. “That was great, and we’ll talk tomorrow,” Biden said in response to a shouted question upon his return late Sunday.

The call revived the talks, and negotiators gathered at the Capitol for 2 1/2 hours Sunday evening to say little of what they had left. Last week the financial markets took a tumble After the conversation stopped.

McCarthy, R-Calif., told reporters earlier Sunday that the call with Biden was “productive,” and Biden told a news conference before departing Japan: “I think we can reach an agreement.”

But McCarthy said, “I’ve been very clear with him from the beginning. We have to spend less than what we spent last year,” he said.

Earlier, Biden used his closing news conference in Hiroshima, Japan, to say he had done his part by agreeing to the spending cuts and warning, “It’s time for Republicans to accept that no deal was made just for them, individually. It’s partisan terms.”

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“Now is the time for the other side to move on from their extreme position,” he said.

GOP lawmakers are holding tight to demands for sharp spending cuts with caps on future spending, rejecting alternatives proposed by the White House and calling for deficit reduction with new revenue from taxes.

McCarthy has privately insisted in his conversations with Biden that tax hikes are off the table

Republicans want next year’s spending to return to 2022 levels, but the White House has proposed keeping 2024 as it is now for the 2023 budget year. Republicans initially sought to impose spending limits for 10 years, though a recent plan reduced that to six. The White House wants a two-year budget deal.

A compromise on those topline spending levels would help give McCarthy to conservatives, while it would drive away the Democratic votes needed in a divided Congress to pass any bill.

Republicans also want work requirements for Medicaid The health care plan, though the Biden administration opposes it, says millions of people could lose coverage. The GOP also introduced new cuts to food assistance by limiting the ability of states to waive work requirements in areas with high unemployment. But Democrats have said any changes to work requirements for government assistance recipients would be a non-starter.

GOP lawmakers are also seeking cuts to IRS money, and would shift much of the spending cuts to other federal programs by exempting the defense and veterans accounts from cuts.

The White House countered by keeping defense and non-defense spending equal next year, which would save $90 billion in the 2024 budget year and $1 trillion over 10 years.

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All parties are looking at the possibility of a package that includes a framework to accelerate energy project developments.

McCarthy indicated that despite the White House’s push by Republicans to accept parts of their proposed immigration overhaul.

For months, Biden has refused to engage in negotiations on the debt ceiling, arguing that Republicans in Congress are trying to use the borrowing limit vote as leverage to get executive concessions on other policy priorities.

But as June approaches, Republicans put their own spending legislation on the table and the White House begins talks on a budget deal that could include an increase in the debt ceiling.

McCarthy faces a hard right that could reject any deal, which has led some Democrats to oppose any compromise with Biden and Republicans and to raise the debt ceiling himself to avoid default.

However, the President said he would rule out the possibility of invoking the 14th Amendment for the time being. As a solution, it is said to be an “unsettled” legal question and bound to the courts.

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Miller reports and Associated Press writer Josh Bock contributed from Hiroshima, Japan. Associated Press writers Kevin Freking, Farnoosh Amiri, Colin Long and Will Weissert contributed to this report from Washington.

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