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WASHINGTON — President Joe Biden and congressional leaders faced off Tuesday in their first face-to-face meeting aimed at averting an unprecedented default by the U.S. government.
The president welcomed House Speaker Kevin McCarthy, House Democratic Leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and Minority Leader Mitch McConnell in the Oval Office. Their initial challenge was simply to agree on what they were talking about at their first substantive meeting in months.
With fears of economic chaos that the government could fail to meet its obligations as soon as June 1, Republicans came to the White House hoping to negotiate sweeping cuts to federal spending in exchange for allowing new borrowing to avoid default.
Biden, on the other hand, will step up his opposition to holding the country’s entire confidence and credibility “hostage” in negotiations — and affirm his willingness to hold budget talks only after default is no longer a threat.
In brief remarks before substantive discussions began, Biden quipped to reporters, “We’re going to get started, and fix all the problems in the world.”
Ahead of the White House meeting, both McCarthy and White House press secretary Karin Jean-Pierre insisted that avoiding a default would be easy — as long as the other party capitulates. The gulf between these opposing positions is fueling uncertainty roiling financial markets and threatening to turn into a tidal wave that overwhelms the country’s economy. The meeting is scheduled to start after U.S. financial markets are closed that day.
McCarthy said Tuesday that a federal debt deal needs to be reached by next week if Washington is to meet the June 1 deadline. Raise the debt limit.
“I don’t think it’s that hard,” McCarthy told reporters at the U.S. Capitol.
He has the backing of McConnell, who has his House members spearheading the negotiations and backing him ahead of the White House meeting.
“There is no reason for our country to be heading into crisis,” McConnell said. “President Biden needs to negotiate spending with Speaker McCarthy.”
Biden and the Democrats don’t see it that way. The president has insisted that raising the debt ceiling is non-negotiable and that spending limits will be addressed separately as part of the annual budget process.
House Republicans recently passed a sweeping bill to cut spending, opening the talks. But the legislation has no chance in the Democratic Senate, where the White House has threatened to veto it.
Referring to the House bill, McCarthy said, “We all said default was not an option — but only one of us took action.”
Expectations for a breakthrough on Tuesday were low.
A default would have wide-ranging effects, threatening to disrupt social security payments to retirees, destabilize global markets and tip the country into a potentially debilitating recession, officials said.
Treasury Secretary Janet Yellen acknowledged in an interview with CNBC on Monday that there is a “very wide gap” between Democrats and Republicans. She said Biden was unwilling to discuss compromises that would “put a gun to the head of the American people and the American economy.”
Biden has wrapped up the meeting and will travel to Westchester County, N.Y., on Wednesday, where he is scheduled to speak on how spending cuts approved by House Republicans would hurt teachers, seniors in need of food assistance people and veterans seeking health care.
It’s part of a broader campaign by Biden to paint the Republican cuts as draconian. Aides believe the message both strengthens his position in negotiations with Republicans and advances his efforts to run for re-election in 2024. His visit on Wednesday will be in a congressional district that Biden won in 2020 but is now represented by Republican Rep. Mike Lawler.
While Biden traveled to the district to bash House Republicans, Lawler said in an interview Tuesday that he had accepted an invitation from the White House — “probably surprising them” — to appear with the president at Westchester Community College.
“He came to our district to discuss the most pressing issues,” Lawler said. He stressed that Biden, McCarthy and Schumer must negotiate a deal that can curb spending and avoid default.
Democrats continued to warn that popular programs would be hit hard as the House GOP bill did not specify which federal programs would be cut. The Democrat-aligned House Majority Forward Party announced a $1 million campaign on Tuesday to expand such cuts, while the House Republican campaign committee has made its own effort to paint Democrats as a “money addict.”
While calling for a “clean” increase in the debt ceiling, Biden said he was open to discussing how to reduce the federal deficit. His budget plan would cut the deficit by nearly $3 trillion over a decade, largely through changes such as tax increases for the wealthy and making the government negotiate prescription drug prices.
By contrast, the bill passed by the House of Representatives with Republican votes would achieve $4.5 trillion in deficit reduction by cutting spending, eliminating tax breaks for investing in clean energy and reversing Biden’s plan to reduce the burden of student loan debt.
McCarthy, the California Republican, is betting his oratory on getting concessions from Biden in exchange for raising the borrowing limit, and some of his members insist they will refuse to vote on the debt measure unless all of their proposals become final legislation .
While some jitters are beginning to emerge in financial markets, the business community has so far largely avoided taking sides in the showdown, instead calling for a deal.
“There is an urgency to secure a bipartisan path to raising the debt ceiling,” said Josh Bolten, head of the Business Roundtable, which represents CEOs. “The cost of default, and even the threat of default, is simply too high. .”
The U.S. Chamber of Commerce on Tuesday laid out its own priorities for a quick deal, saying “there are no better two starting points than allowing reforms and agreeing on a spending cap.”
Biden’s refusal to negotiate the debt ceiling stems from his first-hand experience in 2011, when he was Barack Obama’s vice president, when the administration made painful concessions to Republicans to avoid a default. Biden told aides it was an experience he refused to repeat, not just for himself but for future presidents.
“There is no plan B,” Bharat Ramamurti, deputy director of the White House National Economic Council, told CNN on Monday. “Our plan is for Congress to act unconditionally to address the debt ceiling.”
It’s worth noting, though, that the administration hasn’t ruled out raising the debt ceiling in the near term, which would bring the deadline for increasing federal borrowing authority in line with government spending negotiations that must be resolved by Sept. 30.
While memories of the 2011 debt-ceiling standoff are still fresh in Washington, aides to Senate Republican Leader Mitch McConnell have begun pointing to another, more recent battle as the standoff featured a Democratic president and a Republican speaking out. people. Instructive example.
In 2019, then-President Donald Trump and then-new Democratic House Speaker Nancy Pelosi struck a broader fiscal deal that not only boosted the state’s borrowing authority for two years but also avoided a crisis for both parties. Both deplore the automatic budget cuts.
Aides said McConnell had implored Trump to negotiate directly with Pelosi and House Democrats — both parties were able to defer the possibility of a debt default until the Trump presidency despite political turmoil elsewhere after.
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