WASHINGTON, May 22 (Reuters) – President Joe Biden and House Speaker Kevin McCarthy met at the White House on Monday about raising the $31.4 trillion U.S. government debt ceiling, with the U.S. economy at risk of collapse without agreement to be reached in 10 days.
The Democratic president and top congressional Republicans have struggled to advance a deal, as McCarthy pressured the White House to agree to spending cuts in the federal budget that Biden deemed “extreme,” and the president pushed new taxes on wealthy Republicans. reject.
They have just 10 days to reach an agreement – until June 1 – to increase the government’s self-borrowing limit or trigger an unprecedented debt default that economists have warned of. which may lead to a recession.
The two leaders showed no sign of close agreement in statements to reporters ahead of their meeting.
Biden said he was “hopeful” they could make progress. Both sides need a bipartisan agreement to “sell it” to their constituents, he said, adding that there are some disagreements.
McCarthy, who sat next to Biden in the Oval Office, said, “I think at the end of the day we will find common ground” but differences remain.
Treasury Secretary Janet Yellen on Monday offered a sobering reminder of how little time is left, saying that the earliest estimated default date remains June 1 and that it is “highly likely” that the Treasury will not already able to pay off all government obligations by early June if the debt ceiling is not raised.
White House aides met with Republican negotiators on Capitol Hill for two hours on Monday, and early signs are that the talks are going well.
Any deal to raise the limit must pass both houses of Congress, and therefore depends on bipartisan support. McCarthy’s Republicans control the House 222-213, while Biden’s Democrats hold the Senate 51-49.
Failure to raise the debt ceiling would trigger a default that would shake financial markets and raise interest rates on everything from car payments to credit cards.
US markets rose on Monday as investors awaited updates on the negotiations.
It will take several days to move the legislation through Congress if and when Biden and McCarthy come to an agreement. McCarthy said an agreement must be reached this week to pass Congress and be signed by Biden in time to avoid default.
A White House official said Monday that Republican negotiators last week proposed further cuts to programs that provide food assistance to low-income Americans, and stressed that there is no deal to could pass Congress without support from both parties.
CUT AND CLAWBACKS
Republicans want discretionary spending cuts, new work requirements for some programs for low-income Americans and a clawback on COVID-19 aid approved by Congress but has not yet been spent in lieu of raising the debt ceiling, which is needed to cover lawmakers’ expenses. previously approved spending and tax cuts.
Democrats want to keep spending steady at this year’s level, while Republicans want to return to 2022 levels. A plan passed by the House last month would cut broad government spending by 8% next year.
Biden, who has made the economy central to his domestic agenda and is seeking re-election, said he would consider spending cuts along with tax changes but the latest Republican offer ” unacceptable.”
The president tweeted that he would not restore “Big Oil” subsidies and “rich tax cheats” while putting health care and food aid for millions of Americans at risk.
Both sides must also weigh any concessions with pressure from hardline factions within their own parties.
Some far-right members of the House Freedom Caucus called for a halt to the talks, demanding that the Senate adopt their House-passed bill, which Democrats rejected.
McCarthy, who made several concessions to right-wing hardliners to secure the speakership, risks being fired by members of his own party if they don’t like the deal he cut.
Former President Donald Trump, a Republican seeking another term after losing to Biden in the 2020 election, urged Republicans to force a default if they don’t meet all of their goals, downplaying the any economic consequences.
Liberal Democrats have pushed back against any cuts that would hurt families and low-income Americans, with some urging Biden to act on his own by invoking the 14th Amendment to the Constitution — a an unprecedented move that the president said Sunday would face constraints.
The amendment states that the “validity of the public debt of the United States … cannot be questioned,” but the clause has largely gone unanswered by the courts.
Reporting by David Morgan, Richard Cowan and Andrea Shalal; Written by Susan Heavey; Editing by Lisa Shumaker and Stephen Coates
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