US debt ceiling talks ‘productive’ as Biden and McCarthy to meet 10 days from deadline
US president Joe Biden and House Republican speaker Kevin McCarthy have held a “productive” phone call on the continued impasse over the debt ceiling and promised to meet on Monday after Biden returned to Washington.
McCarthy, speaking to reporters after the call, said there were positive discussions on solving the crisis and that staff-level talks were set to resume later on Sunday.
Asked if he was more hopeful after talking to the president, McCarthy said: “Our teams are talking today and we’re … meeting tomorrow. That’s better than it was earlier. So, yes.”
Speaking from the G7 summit in Japan on Sunday, Biden said he would be willing to cut spending together with tax adjustments to reach a deal, but the latest offer from Republicans on the ceiling was “unacceptable.”
Less than two weeks remain until the 1 June deadline, upon which the Treasury department has said the federal government could be unable to pay all its debts.
Without raising the debt limit, the US government will default on its bills, a historic first, with likely catastrophic consequences. Federal workers would be furloughed, global stock markets would crash and the US economy would probably drop into a recession.
McCarthy’s comments on Sunday struck a more positive tone than the heated rhetoric of recent days which has seen talks stall.
“Much of what they’ve already proposed is simply, quite frankly, unacceptable,” Biden told a news conference in Hiroshima. “It’s time for Republicans to accept that there is no bipartisan deal to be made solely, solely on their partisan terms. They have to move as well.”
The president later tweeted that he would not agree to a deal that protected “Big Oil” subsidies and “wealthy tax cheats” while putting healthcare and food assistance at risk for millions of Americans.
He also suggested some Republican lawmakers were willing to see the US default on its debt in the hope that the disastrous results would prevent Biden from winning re-election in 2024.
After Sunday’s call, McCarthy said while there was still no final deal, there was an understanding to get negotiators on both sides back together before the two leaders met: “There’s no agreement. We’re still apart.”
“What I’m looking at are where our differences are and how could we solve those, and I felt that part was productive,” he told reporters.
McCarthy has said Republicans backed an increase in the defence budget while cutting overall spending, and that debt ceiling talks have not included discussions about tax cuts passed under former president Donald Trump.
Ahead of the call with McCarthy, Biden stressed that he was open to making spending cuts and said he was not concerned they would lead to a recession, but he could not agree to Republicans’ current demands.
Last month, the Republican-controlled House passed legislation that would cut a wide swath of government spending by 8% next year. Democrats say that would force average cuts of at least 22% on programs like education and law enforcement, a figure top Republicans have not disputed.
Republicans hold a slim majority in the House and Biden’s fellow Democrats have narrow control of the Senate, so no deal can pass without bipartisan support. But time is running out, as Monday’s meeting will take place with just 10 days left to hammer out a deal before hitting Treasury’s deadline.
McCarthy has said he will give House lawmakers 72 hours to review an agreement before bringing it up for a vote.