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No debt deal, but Biden, Hill leaders agree to meet again

White House, leadership staff to get to work on budget deal; Democrats say talks must be separate from debt limit

Speaker Kevin McCarthy leaves the Capitol on his way to meet with President Joe Biden to discuss the debt limit on Tuesday.
Speaker Kevin McCarthy leaves the Capitol on his way to meet with President Joe Biden to discuss the debt limit on Tuesday. (Bill Clark/CQ Roll Call)

President Joe Biden and Speaker Kevin McCarthy didn’t appear to get any closer to agreement on how to raise the debt ceiling after a roughly hourlong meeting Tuesday afternoon, which was their first since Feb. 1.

But despite familiar rhetoric from both parties, Biden and congressional leaders plan to meet again Friday, McCarthy and Biden said.

And staff from both sides of the aisle were preparing to meet as soon as Tuesday evening to discuss how to bridge the partisan divide over spending curbs that Republicans want, Democratic leaders said after leaving the White House, where they met with Biden, McCarthy and Senate Minority Leader Mitch McConnell.

“I told congressional leaders that I’m prepared to begin a separate discussion about my budget, spending priorities, but not under the threat of default,” Biden said. He said the debt limit should be raised “for more than a year so we can move things along.”

As the country barrels toward running out of borrowing room and being unable to pay all its bills on time as early as June 1, both sides are still dug in. Biden and congressional Democrats want a clean debt ceiling increase, while McCarthy and other Republicans are demanding concessions.

“Everybody in this meeting reiterated the positions they were at; I didn’t see any new movement,” McCarthy said leaving the meeting. The speaker said the House remains the only chamber to have passed a bill dealing with the debt limit but that he understands Republicans may have to give some ground to get a deal.

Biden said he wouldn’t rule out a short-term debt limit patch to buy more time for talks on a longer-term solution.

McConnell told reporters after the meeting that the U.S. will not “default” on its debt. When asked the same question, McCarthy said he can only control what the House does and that his chamber has already acted. House Republicans passed a bill last month to raise the debt limit in exchange for spending curbs and a slew of other Republican priorities.

Senate Majority Leader Charles E. Schumer and House Minority Leader Hakeem Jeffries tore into McCarthy after the White House meeting, saying he was the only member of the group who wouldn’t commit to avoiding a debt limit breach.

“By not taking default off the table, Speaker McCarthy is greatly endangering America and making it much harder to make progress on budget negotiations,” Schumer said.

Schumer said staff would get together as early as Tuesday night to negotiate about the budget and appropriations process, but he reiterated Biden’s point that that conversation on spending has to be separate from the debt limit.

“There are probably some places we can agree and some places we can compromise, but that has to occur as part of the budget, appropriations process,” Schumer said.

Speaking to reporters in front of the Capitol later, Schumer said staff meetings would include “designees” from the four congressional leaders and the White House, likely including Office of Management and Budget Director Shalanda Young. He said the meetings would go over “who’s where on revenues, who’s where on cuts, who’s where on some of the other provisions that McCarthy has put in the bill that have nothing to do with the budget.”

The House-passed bill includes infrastructure project permitting changes and other provisions from a separate energy package that chamber had previously passed, along with repealing more than $500 billion in clean energy tax credits, a requirement that Congress approve any major administrative rule-makings and more.

Appropriations caps

A deal on spending limits for appropriators may be hard to come by.

Biden has proposed a roughly 5 percent boost for next year’s spending bills. By contrast the House GOP debt limit bill would cut discretionary spending by 8 percent in fiscal 2024 and then limit increases to 1 percent annually for the next nine years.

The bill doesn’t specify, but Republicans have repeatedly said defense, veterans and border security wouldn’t be cut. McCarthy said House appropriators would unveil a spending bill next week for the Department of Veterans Affairs that would boost funding from the current year.

The House bill would raise the debt limit by $1.5 trillion or suspend it through March 31, 2024, whichever comes first. Democrats prefer an increase through the end of 2024, after next year’s elections.

McCarthy said he and Biden being in the same room represents progress, as he and Biden hadn’t met for 97 days before Tuesday afternoon’s meeting.

After the meeting, McCarthy argued in favor of aspects of the Republicans’ bill, including discretionary spending caps, increased work requirements, energy policy changes and recouping unspent pandemic aid.

McCarthy said at the Capitol Tuesday night that he mentioned some of the policies to Biden, and while the president didn’t commit to any of them, Biden did say permitting changes was something they could work on.

Business groups and former leadership aides consider discretionary spending caps and permitting overhaul as two areas of potential agreement in negotiations between Biden and McCarthy.

The House-passed debt limit measure would rescind tens of billions of dollars appropriated to combat the COVID-19 pandemic and associated economic strains, but which haven’t yet been spent. With Biden ending the public health emergency this week and lifting pandemic-era vaccine mandates, it appears he’s willing to entertain that prospect as part of a budget deal.

“We have to take a hard look at it. It’s on the table,” Biden said.

McConnell is leaving negotiating up to McCarthy, and he said after the meeting that Biden must negotiate with McCarthy.

“The solution is between the one person in America who can sign a bill into law and the speaker of the House,” McConnell said. “The sooner they get together, the better. If they get together, the bill will pass both the House and the Senate on a bipartisan basis.”

‘Really troubling’

Senators in both parties expressed concern about the apparent lack of progress out of Tuesday’s meeting.

“It sounds like there was no movement, which is really troubling,” Sen. Todd Young, R-Ind., said. “It’s the administration’s judgment that we only have until June 1, and for the president of the United States to make no movement is really concerning to me.”

Centrist Sen. Joe Manchin III, D-W.Va., said he isn’t encouraged by the meeting and is pessimistic much progress can be made before the leaders reconvene Friday.

“I think it’s ridiculous and embarrassing if you’re thinking by Friday, the staff is going to work something out,” he said. “The staff can’t work something out unless leaders give them some direction.”

If there’s no agreement to raise or suspend the debt limit in time, a range of workarounds have been considered. One of them is involving the Constitution’s Public Debt Clause embodied in the 14th Amendment to simply keep borrowing even after the Treasury Department has hit the ceiling and has no more wiggle room.

Laurence H. Tribe, a constitutional law scholar who previously said such a move wouldn’t be legal, has now come around that it may be a more viable option.

“I have been considering the 14th Amendment and a man I have enormous respect for, Larry Tribe, who has advised me for a long time thinks that it would be legitimate,” Biden said. “But the problem is it would have to be litigated, and in the meantime without an extension it would still end up in the same place.”

Biden said there haven’t been any internal discussions about a more esoteric option: minting a trillion-dollar platinum coin and depositing it at the Federal Reserve to free up cash to meet federal obligations.

“I don’t think anybody studied the minting of the coin issue,” Biden said.

Laura Weiss, Caitlin Reilly, Lindsey McPherson, David Lerman and Paul M. Krawzak contributed to this report.