HIROSHIMA, Japan, May 21 (Reuters) – U.S. President Joe Biden and House Republican Speaker Kevin McCarthy will meet to discuss the debt ceiling on Monday, after a “productive” phone call as the president headed back to Washington, both sides said Monday. Sunday
McCarthy, who spoke to reporters at the US Capitol after the call, said there had been positive discussions on resolving the crisis and that staff-level talks were set to resume later on Sunday.
Asked if he was more optimistic after speaking with the president, McCarthy said: “Our teams are talking today and we set (sic) to have a meeting tomorrow. That’s better than before. So, yes.”
A White House official confirmed the meeting on Monday but offered no specific time. Staff from both sides reconvened in McCarthy’s Capitol office for talks at around 6pm (2200 GMT) on Sunday.
Biden, before leaving Japan after the G7 summit earlier on Sunday, said he was willing to cut spending along with tax changes to reach a deal but the latest offer from on the ceiling of the Republican “unacceptable.”
There are less than two weeks left until June 1, when the Treasury Department warns that the federal government may not be able to pay all of its debts, a deadline confirmed by US Treasury Secretary Janet Yellen on Sunday. A failure to raise the debt ceiling would trigger a default that would cause chaos in financial markets and a rise in interest rates.
McCarthy’s comments on Sunday appeared more positive than the heated rhetoric of recent days, as both sides returned to calling the other’s position extremist and talks stalled.
“Most of what they’re proposing is simply, frankly, unacceptable,” Biden told a news conference in Hiroshima. “It’s time for Republicans to accept that no bipartisan deal will ever be made, only on their partisan terms. They need to act, too.”
The president later tweeted that he would not agree to a deal that protects “Big Oil” subsidies and “rich tax cheats” while putting health care and food at risk for millions of million Americans.
He also suggested some Republican lawmakers are willing to see the US default on its debt so that the disastrous consequences prevent Biden, a Democrat, from winning re-election in 2024.
After Sunday’s call, McCarthy said that while there was no final agreement, there was an understanding to bring back negotiators on both sides before the two leaders met: “No deal. Still separate.” us.”
“I’m looking at where our differences are and how we can resolve them, and I feel like that’s a productive part,” he told reporters.
Meanwhile, concerns about default are weighing on markets as an increase in the self-imposed borrowing limit is often needed to cover spending and tax cuts previously approved by lawmakers.
On Friday, the United States was forced to pay high interest rates in a new debt offering.
EXPENDITURE INCREASES
McCarthy said Republicans support increasing the defense budget while cutting overall spending, and that the debt ceiling talks did not include discussions about the tax cuts passed under former President Donald Trump. Trump.
A source familiar with the negotiations said the Biden administration is proposing to continue non-defense discretionary spending for next year.
Biden stressed before the call that he was open to making spending cuts and said he was not worried they would lead to a recession, but he would not agree to the current demands of Republicans.
The Republican-led House last month passed legislation that would cut broad government spending by 8% next year. Democrats have said that would force average cuts of at least 22% to programs such as education and law enforcement, a figure not disputed by top Republicans.
Republicans have a slim majority in the House and Biden’s fellow Democrats have narrow control of the Senate, so no deal can pass without bipartisan support. But time is short as Monday’s meeting comes with just 10 days left to hammer out a deal before a Treasury deadline hits.
McCarthy said he would give House lawmakers 72 hours to review a deal before bringing it up for a vote.
The last time the country came close to default was in 2011, also with a Democratic president and a Republican-led Senate.
Congress eventually avoided default, but the economy suffered heavy shocks, including the first-ever downgrade of the United States’ top-tier credit rating and a major stock selloff.
Reporting by Trevor Hunnicutt; Editing by Simon Cameron-Moore
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