The White House and congressional Republicans struggled to make meaningful progress on a deal to raise the U.S. borrowing ceiling on Tuesday, putting the economy and financial markets at risk just over a week away from a potential debt default.
President Joe Biden and Republican House Speaker Kevin McCarthy met at the White House on Monday night for what they each described as “productive” direct talks, raising hopes that they were getting closer to a deal.
But employee-level talks that took place late Monday and Tuesday showed no sign of a breakthrough — just a promise to continue the dialogue.
“While differences remain, the president, the speaker and their teams will continue to discuss the way forward,” White House press secretary Karine Jean-Pierre told reporters at a news conference Tuesday.
Earlier Tuesday, McCarthy held a closed-door meeting with Republican lawmakers in the lower house of Congress, where he said he was “very far away” from reaching a deal with Biden.
“There’s something that divides us . . . You can’t spend more money next year than you spend this year, at a glance. We’ve got to help people start working the way jobs demand,” McCarthy later told reporters.
The lack of any tangible progress on a deal will be increasingly worrisome, given that the US Treasury has warned it could run out of cash to pay all its bills as soon as June 1. Such an event could trigger massive systemic disruption in financial markets and hit households and businesses across the United States.
Any agreement must be reached within days of the deadline to allow time for both houses of Congress to pass legislation and send it to Biden for his signature.
The biggest sticking point is where to set discretionary spending levels over the next few years. While the White House has proposed freezing spending levels for the next fiscal year, Republicans want to cut spending sharply before spending starts to edge up again for an extended period.
“They’re just now coming up with the idea of freezing?” McCarthy said.
The two sides have also been at loggerheads over adding new work requirements to the social safety net program. As the talks dragged on, Democrats grew impatient, suggesting that Biden should find ways to unilaterally avoid breaching the contract on constitutional grounds, even though such a solution would be legally risky.
Senator Chris Van Hollen, a Democrat from Maryland, tweeted Tuesday: “As I’ve said from the beginning, McCarthy’s Speaker is too weak and his MAGA caucus is too sympathetic to Trump. control, unable to reach any reasonable agreement.” The former president’s “Make America Great Again” slogan.
But McCarthy insisted a deal was still possible. “I believe we can still get there and get there by June 1.”