Biden and McCarthy are set to continue talking as the debt limit deadline approaches
With time running out to reach a debt limit deal, President Biden and congressional leaders will meet Tuesday for crucial in-person negotiations at the White House to avoid a bankruptcy that economists say could cut jobs and spark a recession .
The 3 p.m. meeting comes a day after Treasury Secretary Janet L. Yellen reiterated that the United States could run out of money to pay its bills on June 1 if Congress does not raise or suspend the debt limit.
Republicans have said they want to cut federal spending before lifting the debt ceiling. The president has maintained that raising the limit is a responsibility of Congress and must be done without preconditions to avoid economic disaster, even though he has said he is open to separate spending negotiations.
The White House this weekend projected cautious optimism about a possible deal, but Chairman Kevin McCarthy expressed doubt on Monday.
“I don’t think we’re in a good place,” Mr. McCarthy said. “I know we’re not.”
However, some potential compromise areas have emerged in recent days. Mr McCarthy said on Monday he wanted to negotiate some of the key provisions of the bill to raise the debt limit that House Republicans passed last month. Those include spending caps, allowing changes for domestic energy projects, work requirements for safety net programs like food stamps, and reclaiming unused money allocated to pandemic relief programs. “I felt that everything would be very positive,” he said.
In addition to Mr. McCarthy, Senator Mitch McConnell, Kentucky Republican and Minority Leader; Senator Chuck Schumer, New York Democrat and Majority Leader; and Representative Hakeem Jeffries of New York, the Democratic leader, will join Mr. Biden at the White House.
The government hit the $31.4 trillion debt limit on Jan. 19, and the Treasury Department has used accounting maneuvers to keep paying its bills. Mr Biden is also scheduled to leave for Japan on Wednesday to attend the Group of 7 meeting, adding to the sense of urgency to move forward on the debt limit.
While Mr. McCarthy played down progress, Mr. Biden and his allies said the White House and Congressional teams have had productive talks in recent days.
“We welcome a bipartisan debate about our country’s fiscal future,” Schumer said Monday. “But we have made it clear to our Republican colleagues that default is not an option. The consequences are too harmful, too serious. It has to be off the table.”
Ms Yellen will warn on Tuesday that the deadlock over the debt limit is already impacting financial markets and adding to the burden of debt on US taxpayers. Investors, she will note, have grown cautious about holding on to government debt that matures in early June – when the government could run out of money.
“We are already seeing the impact of brinkmanship,” Ms. Yellen will say at the Independent Community Bankers of America summit, according to excerpts from her prepared remarks.
Ms Yellen, who warned lawmakers on Monday that the Treasury could run out of money as early as June 1, also lamented that households and businesses are now forced to consider the prospect of default as part of their financial plans.
“Too many companies – including yours – have to spend your time planning for the potential risk of a US default, rather than thinking about long-term investments that will grow your businesses and boost the economy,” Ms Yellen will say .
Biden administration officials have said they will not reverse any of the legislation signed by the president, particularly on climate change, and the bill from House Republicans is sure to be dead upon arrival in the Democrat-led Senate.
The bill would subject able-bodied adults with no dependents who receive both federal food aid and Medicaid benefits to work requirements until they are 55 years old, an increase from 49. It would also close a loophole that Republicans claimed it is abused by states. that allows officials to exempt food aid recipients from work requirements.
When asked if he is open to stricter job requirements for utilities, Mr Biden said over the weekend that as a senator he had voted in favor of such measures.
On Monday night, however, Mr Biden’s official Twitter account appeared to close the door to such a proposal. “The House Republican wish list would put a million older adults at risk of losing food aid and going hungry,” Biden said. wrote on Twitter. “Instead of pushing Americans into poverty, we need to reduce the deficit by making sure the rich and big business pay their fair share of taxes.”
Stricter job requirements for programs like food stamps have long been anathema to congressional Democrats, and the proposal would meet stiff resistance in the Senate.
“SNAP already has work requirements,” said Sen. John Fetterman, a Pennsylvania Democrat, referring to the supplemental nutrition aid program. “I didn’t come here to take food away from hungry children, which is exactly what this proposal would do.”
Alan Rappeport contributed reporting.