Debt limit talks pared down to proxies for Biden, McCarthy
Broader group of negotiators seen as hindrance; new round of talks to begin ahead of June 1 deadline
President Joe Biden and Speaker Kevin McCarthy on Tuesday tapped proxies to negotiate directly over how to increase the debt limit with time running short before the government runs too low on funds.
McCarthy and other top congressional leaders met with Biden and Vice President Kamala Harris at the White House amid a debt limit standoff between the two parties.
McCarthy and his Senate GOP counterpart, Minority Leader Mitch McConnell had complained about having too many negotiators in the room, stressing that only the speaker and president would be able to cut a deal in the end.
“The structure of how we negotiate has improved,” McCarthy said of the decision to streamline talks after a week of staff meetings that saw little progress. “So it now gives you a better opportunity even though we only have a few days to get it done.”
McCarthy said Republicans and Democrats are still far apart on the issues, after weeks of calls from the GOP to pair spending cuts with a debt limit increase and from Democrats to pass a “clean” debt limit bill without negotiating over the statutory borrowing limit. But McCarthy added it’s possible to get a deal by the end of this week.
He told reporters after returning to the Capitol that Steve Ricchetti, counselor to the president, and Office of Management and Budget Director Shalanda Young will negotiate on Biden’s behalf, while Rep. Garret Graves, R-La., and McCarthy aides will represent the speaker.
"Nothing has been resolved in this negotiation. So the only thing that has changed is we finally have a format that has proven to work years in the past,” he said.
McCarthy said negotiators have yet to agree to the duration of a debt limit increase, but suggested that savings lower than the $4.8 trillion in the House-passed bill wouldn't convince Republicans to raise the debt limit by more than the $1.5 trillion increase in their bill.
"Anytime somebody wants to raise the debt ceiling more, show me where you want to save more," he said. "If we're able to save $5 trillion to raise the debt ceiling and you want to go longer, you got to be open to doing more items as well."
After the White House meeting, McConnell said he’ll do his part to get any agreement they reach across the finish line. “I’m prepared to try to deliver as much of my conference as I can for whatever the speaker and the president can agree to that we know will get a signature,” he said.
The White House described Tuesday’s meeting as a productive and direct conversation about the need to make sure the country doesn’t breach the debt limit and about a budget agreement that could make it to Biden’s desk.
Biden emphasized he’s optimistic there’s a path to a deal if both sides negotiate in good faith and recognize they won’t get everything they want, according to the White House’s summary of the meeting. Biden also directed staff to continue meeting daily.
Congressional Democrats were on board with the move to pare down negotiations, which have over the last week included staff from all four congressional leaders’ offices and the Biden administration. They struck a notably different tone than after an initial White House meeting last week, when Democrats emerged taking some shots at McCarthy.
Senate Majority Leader Charles E. Schumer told reporters at the Capitol that he’s comfortable with proxies for McCarthy and the White House holding negotiations and that those talks could start as soon as Tuesday evening.
He said at the White House that the meeting had been cordial and productive, with all parties agreeing a deal to increase the debt limit must have bipartisan support in the House and Senate. There were real conversations about differences in the meeting, but they were all respectful, Schumer added.
House Minority Leader Hakeem Jeffries said congressional leaders and the White House will proceed “with the fierce urgency of now” to avoid hitting the debt limit in just two weeks.
Treasury Secretary Janet L. Yellen reiterated this week that the government could hit the “x date” when it no longer has enough funds to pay all its bills on time as soon as June 1.
In a speech at the Independent Community Bankers of America summit on Tuesday, she laid out potential consequences of “an unprecedented economic and financial storm” if Congress doesn’t act in time, including Social Security beneficiaries and military families going without payments they rely on, critical government services being unable to function and a severe recession.
“Time is running out,” Yellen said. “Every single day that Congress doesn’t act, we are experiencing increased economic costs that could slow down the U.S. economy.”
With the deadline closing in, the White House and Congress are eyeing schedule changes to pass a deal in time. Lawmakers are still largely dismissing the option of a short-term patch that could give extra breathing room for talks.
Instead, leaders in the Senate and House have indicated they could scrap plans to take weeklong recesses for Memorial Day, or at least cut their breaks short. The Senate is currently scheduled for a break from Washington next week while the House is set to leave town the following week.
“At the end of the day, if we need to be back we’re going to be back,” McCarthy said after the White House meeting.
Biden has his own travel plans, which were drawing rebukes from the GOP ahead of Tuesday’s meeting. The president is set to leave Wednesday for Japan to meet with key U.S. allies that are part of the G-7 and was scheduled to travel to Papua New Guinea and Australia afterwards.
Biden will instead return to the U.S. on Sunday after the G-7 summit ends so that he can meet with congressional leaders and ensure the debt limit is addressed in time, White House Press Secretary Karine Jean-Pierre said in a statement.
Leaving Tuesday’s meeting, leaders largely declined to get into specifics on what would emerge as part of an agreement. But McCarthy again pointed to measures in a House-passed GOP debt limit bill including those to limit future discretionary spending and expand work requirements for anti-poverty programs.
He was particularly bullish on the bill’s proposal to claw back unspent COVID-19 aid, saying that would be a “no-brainer” because it hasn’t been used and the pandemic subsided. “I think at the end of the day it will be in the bill,” McCarthy said.
McCarthy has drawn a red line on ensuring expanded work requirements for programs like the Supplemental Nutrition Assistance Program, formerly known as food stamps, are in a final deal. Schumer declined to draw any red lines but pointed to Democrats' opposition to that proposal.
“You know the feelings of my caucus on work requirements,” he said.
Schumer said provisions to speed up permitting for energy projects was part of the discussion at the White House meeting and noted a majority of Senate Democrats voted for an energy infrastructure permitting bill last year.
One area that appears to be off the table is any tax increases, which Republicans have rejected in the talks. But during an appearance at the White House’s Jewish American Heritage Month event after the debt limit meeting, Biden said that won’t stop a deal from getting done.
"It's disappointing that in our discussions the congressional Republicans have not been willing to discuss raising revenues, but the policy differences between the parties should not stop Congress from avoiding default,” he said. “I made clear again in today's meeting that default is not an option."
Niels Lesniewski contributed to this report.