By STEPHEN GROVES, ZEKE MILLER and JOSH BOAK (Associated Press)
WASHINGTON (AP) — Debt ceiling talks were set to resume Sunday night as Washington rushed to hammer out a budget compromise as well as an agreement to raise the nation’s borrowing limit and avoid a federal default. that would destroy the economy.
President Joe Biden and House Speaker Kevin McCarthy spoke by phone Sunday as the president returned home on Air Force One from the Group of Seven summit in Japan. Upbeat, McCarthy, R-Calif., told reporters on Capitol Hill that the call was “productive” and that recurring negotiations between his staff and White House officials focused on spending cuts.
He is due to meet Biden on Monday at the White House.
Negotiators for the Democratic president and the Republican president appear to be closing in on a budget cap for the 2024 budget year that would be key to resolving the impasse. They face a deadline, as early as June 1, when the government could run out of cash to pay its bills. Treasury Secretary Janet Yellen said on Sunday that June 1 was a “difficult deadline”.
McCarthy said after his call with Biden that “I think we can work out some of these issues if he understands what we’re looking at.” The speaker added: “But I was very clear with him from the start. We need to spend less money than we spent last year.
McCarthy emerged from that conversation with an air of optimism and was careful not to criticize Biden’s trip, as he had done before. He warned: “There is no agreement on anything.”
“We are examining, how can we have a victory for this country?” said McCarthy. “How do we solve problems? He said he doesn’t think the final legislation will overhaul the federal budget and the nation’s debt, but at least “set us on the path to changing the behavior of this runaway spending.”
The White House confirmed Monday’s meeting and talks late Sunday, but did not specify the leaders’ call.
Earlier, Biden used his final press conference in Hiroshima, Japan to warn House Republicans that they must drop their “extreme positions” on raising the debt ceiling and that he will not there would be no agreement to avoid a catastrophic default solely on their terms.
Biden said “it’s time for Republicans to accept that there is no deal to be made only, only, on their partisan terms.” He said he had done his part by trying to raise the borrowing limit so the government could keep paying its bills, agreeing to major spending cuts. “Now it’s time for the other side to leave its extreme position.”
Biden was scheduled to travel from Hiroshima to Papua New Guinea and Australia, but cut his trip short in light of tense negotiations with Capitol Hill.
Even with a new wave of tax receipts expected soon, perhaps giving both sides more time to negotiate, Yellen said on NBC’s “Meet the Press” that “the odds of reaching June 15, while being in able to pay all our bills, are quite low.”
GOP lawmakers cling to demands for deep spending cuts with caps on future spending, rejecting alternatives offered by the White House to cut deficits in part with tax revenue.
Republicans want to bring next year’s spending back to 2022 levels, but the White House has proposed keeping 2024 at the same level as today, in fiscal year 2023.
A compromise on those higher spending levels would allow McCarthy to meet conservative expectations, while not being so harsh that it would drive out the Democratic votes that would be needed for the divided Congress to pass any bill.
Chief Republican negotiator, Rep. Garret Graves of Louisiana, speaking alongside McCarthy on Capitol Hill, said the numbers “are the bedrock” of any deal.
Republicans also want work demands on the Medicaid health care program, though the Biden administration has countered that millions could lose coverage. The GOP has further introduced further cuts in food aid by restricting states’ ability to waive work requirements in places with high unemployment. It is estimated that this idea, when launched under President Donald Trump, caused 700,000 people to lose their dietary benefits.
GOP lawmakers are also seeking to cut money from the IRS and, by sparing the Defense and Veterans Affairs accounts from the cuts, would shift the bulk of the spending cuts to other federal programs.
The White House has responded by holding defense and nondefense spending flat next year, which would save $90 billion in fiscal year 2024 and $1 trillion over 10 years.
All parties are considering the possibility of the package including a framework that would accelerate the development of energy projects.
And despite pressure from Republicans for the White House to accept parts of their immigration overhaul proposal, McCarthy said the focus is on the debt and the budget previously approved by the House.
“I think we can come to an agreement,” Biden said, though he added this about the Republicans: “I can’t guarantee they wouldn’t force a default by doing something outrageous.”
Republicans had also rejected various White House revenue proposals. Among the proposals the GOP opposes are policies that would allow Medicare to pay less for prescription drugs. Republicans have also refused to roll back Trump-era tax breaks on corporations and wealthy households, as Biden’s own budget proposed.
Biden, nonetheless, insisted that “revenues are not irrelevant.”
For months, Biden had refused to engage in debt limit talks, saying Republicans in Congress were trying to use the borrowing limit vote as leverage to extract concessions from the administration on more money. other political priorities.
But with the potential June 1 deadline looming and Republicans putting their own legislation on the table, the White House has kicked off talks on a budget deal that could accompany an increase in the debt ceiling.
Biden’s decision to establish a call with McCarthy came after another start-up day with no outward signs of progress.
The president tried to assure leaders attending the meeting of the world’s most powerful democracies that the United States would not default. US officials said leaders were worried, but largely confident that Biden and US lawmakers would resolve the crisis.
The chairman, however, said he ruled out taking action on his own to avoid a default. All of these measures, including suggestions to invoke the 14th Amendment as a solution, would be blocked in court.
“That’s a question that I think is unresolved,” Biden said, adding that he hopes to try to get the judiciary to weigh in on the notion going forward.
Miller and Boak reported from Hiroshima, Japan. Associated Press writers Lisa Mascaro, Colleen Long and Will Weissert contributed to this report.