No debt limit deal as a hypothetical deadline looms

hHouse Speaker Kevin McCarthy emerged from a pivotal one-on-one meeting with President Joe Biden on Monday without a deal to raise the debt limit, but he expressed optimism about reaching a deal in time to avert a potentially catastrophic federal default.

“I felt we had a productive discussion,” McCarthy said after the meeting. “I think the tone tonight was better than any other time we’ve had discussions.”

McCarthy insisted that the Republican-controlled House of Representatives would not raise the debt ceiling, which refers to the maximum amount the United States is allowed to borrow to meet its obligations, without spending cuts attached. With mere days to reach a deal before a looming June deadline, the two sides remain at odds over the GOP proposal to cut spending by imposing stricter labor requirements for federal aid programs and setting limits on future spending.

But the contours of a possible deal are slowly taking shape. The two sides discussed a framework for a deal that would recover about $30 billion in untapped COVID-19 relief funds, agree to allow reforms to energy development, and impose spending caps through the end of 2024, according to those familiar with the talks.

Congress and the White House are running out of time to broker a deal before the US Treasury Department runs out of cash to pay the government’s bills, resulting in an unprecedented default. Treasury Secretary Janet Yellen reiterated on Monday that the money is expected to run out in early June, possibly as early as June 1. McCarthy says a deal must be reached this week to allow enough time for the legislation to pass through the House and Senate. Under legislative rules, House lawmakers have 72 hours to read the bill once the text is released.

Read more: What you should know about the history of the debt ceiling.

Like McCarthy, Biden called the meeting “productive” in a statement, but noted that “areas of disagreement” remain. Monday’s meeting was the third Oval Office discussion of the debt ceiling between the two leaders. This came just one day after Biden returned from the G7 summit in Japan to resume negotiations, as pressure intensified.

Sticking points remain. McCarthy insisted that government spending in the next fiscal year should be lower than it was last year, backing away from Democrats, who want to keep spending flat from fiscal 2023. A delegate. Patrick McHenry of North Carolina, a key McCarthy ally who attended the meeting, told reporters it wouldn’t be easy to solve the problem.

“Directing spending cuts year in and year out is the hardest thing to do in Washington, but that is directing the speaker to his negotiating team,” said McHenry, who serves as chairman of the House Financial Services Committee.

Another major issue in the discussions is the Republican proposal on work requirements for Medicaid, which the Biden administration has said would result in millions of people losing coverage. The Republican Party also introduced new cuts to food aid by making it more difficult for states to waive labor requirements in places with high unemployment. The Congressional Budget Office projected last month that if the GOP bill becomes law and stricter work requirements are imposed, about 600,000 Americans will lose health insurance and about 275,000 Americans per month will lose access to food stamps.

Read more: Could Joe Biden use the Fourteenth Amendment to solve the debt ceiling?

McCarthy has previously said that labor requirements for public assistance programs are non-negotiable in debt ceiling talks. On Sunday, Biden said House Republicans were taking “extreme positions” and called the GOP’s current proposal “unacceptable.” But McCarthy has so far stuck firmly to demands for sharper spending cuts with a cap on future spending, rejecting alternatives put forward by the White House that call for reducing the deficit in part with new revenue from tax increases for wealthy Americans.

“I think we have to look at the tax loopholes and make sure the wealthy pay their fair share,” Biden said in the Oval Office before the meeting. “I think revenue is important, as long as you don’t tax anyone with less than $400,000.”

McCarthy said his staff will continue to lead discussions with Biden, though the two leaders will likely “talk every day” until the debt ceiling is resolved.

write to Eat Nick Buble [email protected]