President Joe Biden hosts debt ceiling talks with House Speaker Kevin McCarthy, R-Calif., in the Oval Office of the White House on May 9, 2023.
Kevin Lamarck |: Reuters:
WASHINGTON – President Joe Biden is set to meet with House Speaker Kevin McCarthy along with other top congressional leaders on Tuesday afternoon to discuss the debt ceiling, a day before Biden is set to travel to Japan for the Group of Seven summit.
Behind the scenes, staff from both parties have been working every day since leaders met last week to try to reach an agreement before June, when the federal government could run out of money. The leaders left the previous match with little progress.
“I really think there’s a desire on their part, as well as on our part, to reach an agreement, and I think we’re going to be able to do that,” Biden told reporters Sunday in Delaware. As for his state of mind, he said: “I remain an optimist because I am an optimist by nature.”
McCarthy sang a different tune outside the Capitol on Monday, telling NBC News: “I still think we’re far apart.”
“I still don’t think they want a deal,” McCarthy said. “It looks like they want to look like they are in a meeting, they don’t talk about anything serious.”
Biden and McCarthy were scheduled to meet again on Friday with Senate Majority Leader Chuck Schumer, Senate Minority Leader Mitch McConnell and House Minority Leader Hakeem Jeffries, who attended the last meeting, but that was postponed as negotiations continued behind the scenes. Vice President Kamala Harris will also be present this time.
A source familiar with the meetings told NBC News that the delay is a positive development and a sign that talks are “making progress.”
The White House says Biden plans to attend the G-7 summit in Japan later this week, but the president himself has said that could change depending on the debt ceiling talks. After the G-7 visit, Biden was due to travel to Papua New Guinea before heading to Australia for a meeting of the leaders of the Quad countries, the US, Australia, Japan and India.
McCarthy told reporters it was critical they reached an agreement before this weekend so the bill would have enough time to pass both houses of Congress and return to the president’s desk for his signature.
Discussions are of great interest. A default on sovereign debt would wreak havoc on the economy and disrupt global markets. A Treasury bond default could derail the US economy. The last time Republicans in Congress threatened default in 2011, Standard & Poor’s downgraded the U.S. credit rating to AA+ from AAA for the first time.
Eliminating the debt ceiling is necessary for the government to cover spending commitments already approved by Congress and the president and prevent default. It does not allow for new costs. But House Republicans have said they won’t lift the cap unless Biden and lawmakers agree on future spending cuts.
The finance ministry has taken emergency steps to continue paying government bills and expects to avoid a first-ever default at least until early June. Treasury Secretary Janet Yellen warned last week that failure to raise the debt ceiling would lead to “economic disaster.”
If the US were to default, gross domestic product would fall by 4% and more than 7 million workers would lose their jobs, Moody’s Analytics recently predicted. According to data, even a brief default would result in the loss of 2 million jobs.