[1/2] U.S. House Speaker Kevin McCarthy (R-CA) speaks to reporters in front of the West Wing after debt ceiling talks with U.S. President Joe Biden in the Oval Office of the White House in Washington.
WASHINGTON, May 15 (Reuters) – President Joe Biden and Republican House Speaker Kevin McCarthy are set for key debt ceiling talks on Monday, with the U.S. government two weeks away. Bills.
Democratic and Republican staffers are working to find common ground on spending levels and energy regulations ahead of Tuesday’s 3 p.m. EDT (1900 GMT) meeting between Biden, McCarthy and three key congressional leaders.
The White House has not ruled out annual spending caps that Republicans have proposed along with an increase in the nation’s $31.4 trillion debt limit.
Republicans, who control the House, have said they will not vote to raise the debt ceiling unless Democrats agree to sharper spending cuts. Failure to raise the ceiling — a measure needed to cover spending and tax cuts approved by Congress — could trigger a default that could trigger a severe economic downturn.
But McCarthy said he saw little signs of progress ahead of a meeting with Senate Majority Leader Chuck Schumer, a Democrat, top Senate Republican Mitch McConnell and top House Democrat Hakeem Jeffries. Seven Nations Meeting in Japan.
“They’re not doing well. There’s no progress that I’m seeing, and it really worries me about the timeline where we’re at,” McCarthy told reporters of the talks. “We have big issues that you have to go through the House and the Senate, and there’s certainly not enough progress to see that.”
Asked if Biden should go to Japan without a debt ceiling deal, McCarthy told reporters: “Look, I think an American president should focus on America’s solutions. I think that shows your values and your priorities.”
Biden had no public comment on the status of negotiations on Monday, after telling reporters on Sunday that he thought both sides wanted to reach a deal. “I think we can do it,” he said.
Biden’s trip will take some time for the two sides to reach a deal before the U.S. runs out of money to pay its bills, which could come as soon as June 1, Treasury officials say.
A first-ever U.S. default would plunge the country into recession and cause chaos in global financial markets, economists say, and the stance has worried investors and consumers.
Budget talks
Biden has urged Congress to increase the nation’s borrowing capacity without conditions, but the White House says it is open to discussing budget matters with House Republicans.
“Our expectation is that Congress will do what is necessary, even as parallel discussions on the budget continue,” Lael Brainard, chairman of the White House’s National Economic Council, said on “CBS Sunday.”
Republicans are facing pressure from former President Donald Trump, who has said they should allow the country to default if all their demands are not met.
“Better now than later,” he wrote on social media. Three times during Trump’s presidency, lawmakers have raised the debt ceiling, which Congress usually must do to cover spending and tax cuts it approves.
House Republicans passed legislation in April that would pair a $1.5 trillion debt-ceiling increase with $4.8 trillion in spending cuts, mostly achieved by cutting annual discretionary spending by 8% next year and curbing growth in the coming years.
Democrats say they disagree with other elements of the legislation, such as repealing Biden’s student-loan forgiveness initiative and increasing work requirements for some benefit programs.
But they haven’t ruled out spending limits.
Republican Rep. Dan Bacon, a leading centrist, told reporters on Friday that the deal would likely call for annual increases of 2%, rather than the 1% outlined in the Republican bill.
The White House and Republicans could agree to ease permitting requirements for pipelines and other energy infrastructure — though drafting legislation will take time, said Brian Riedl, a fellow at the conservative Manhattan Institute.
He said the longer the two sides take to reach an agreement, the less likely it will be. “The playing field is going to shrink because you’re wasting time on detailed policies,” he said.
David Morgan and Jeff Mason report; By Andy Sullivan; Editing by Cynthia Osterman
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