WASHINGTON — Top congressional leaders walked out of a high-stakes meeting with President Joe Biden on Tuesday, showing little sign they had come any closer to resolving a standoff over the debt ceiling and scrapping the debt ceiling. imminent threat of default.
Officials plan to meet again on Friday as Washington strives to lift the debt ceiling with less than a month before the federal government runs out of money. Biden met with House Speaker Kevin McCarthy, R-Calif., and Minority Leader Hakeem Jeffries, DN.Y., as well as Senate Majority Leader Chuck Schumer, DN.Y., and Leader of the minority Mitch McConnell.
Speaking after the meeting, Biden told reporters that the leaders’ staff agreed to continue meeting starting Tuesday evening and daily through Friday.
“Everyone at the meeting understood the risk of default,” Biden said. “I made it clear in our meeting that default is not an option.”
McCarthy told reporters he saw “no new movement” in debt ceiling negotiating positions at the meeting.
“Everyone in this meeting reiterated the positions they were on,” prior to the meeting, McCarthy said outside the White House.
“I asked [Biden] many times if there were places where we could find savings,” in the federal budget, McCarthy said. “He wouldn’t give it to me.
All of the leaders present except McCarthy agreed to drop the default threat at Biden’s request, according to Democratic leaders present at the meeting.
“We explicitly asked Chairman McCarthy, ‘Would he take the defect off the table?’ He refused,” Schumer said. “Instead of giving us a plan to remove the defect, he gave us a plan to hold the defect hostage. And that’s a shame, because it makes things more complicated.”
Biden said “I don’t know” what McCarthy thinks.
“I think he knows better,” the president said. “I think he knows a default would be disastrous and I think he knows what he passed couldn’t pass anywhere in Congress — he’s dead on arrival.”
Asked about the mood in the room, Biden said three of the four leaders were sane throughout the talks.
“The tenor of the meeting was with three of the four attendees being very measured and low-key. At times there was a little assertiveness that was maybe a little over the top from the speaker,” Biden said.
Schumer called on McCarthy to negotiate proposed spending cuts through the usual budgetary process without threatening default.
“There are big differences between the parties. If you look at what President Biden had proposed and you look at what President McCarthy proposed, they are very, very different,” Schumer said. “We can try to come together on these in a budget and appropriations process, but use the risk of default, with all the dangers of the American people, hostage and say this is my way or not, or especially my way or not at all, it’s dangerous.”
McConnell joined McCarthy outside the White House, where he reiterated that Congress would not allow the country to default on its debt.
“The United States has never defaulted on its debt and it never will,” McConnell said. Still, “there has to be an agreement…and the sooner the president and the president can come to an agreement, the sooner we can solve the problem.”
Jeffries, speaking to reporters after the meeting, cast House Republicans as the only group that wouldn’t rule out the prospect of a first-ever US debt default.
“The House Democrats took the defect off the table; the Senate Democrats took the defect off the table; the Senate Republicans, as Chief McConnell just indicated, took the defect off the table; the President Biden took the default off the table early on,” Jeffries said. “There is a group in Washington, DC, the Extreme MAGA Republicans, who have indicated that they are prepared to lead us down a path of default. This is reckless, irresponsible and extreme.”
Raising the debt ceiling is necessary for the government to cover spending commitments already approved by Congress and the President and avoid defaults. This does not authorize new expenditures. But House Republicans have said they won’t lift the limit if Biden and lawmakers don’t agree to future spending cuts.
The White House has stressed that while it is open to discussing spending cuts, it will not negotiate with Republicans on the debt ceiling. The Biden administration has said the GOP has a constitutional responsibility to raise the borrowing limit.
“These two are completely independent. Whether you pay the debt or not has nothing to do with your budget,” Biden said on Friday. “Those are two separate issues – two. Let’s get this straight.”
The Treasury Department has begun taking extraordinary measures to continue paying government bills and expects to be able to avoid a first-ever default until at least early June. Treasury Secretary Janet Yellen warned on Monday that failure to raise the debt ceiling would lead to “economic disaster”.
A sovereign debt default would wreak havoc on the economy and disrupt markets around the world. A Moody’s report last year said a default on Treasuries could send the US economy into a fall as bad as the Great Recession.
If the United States were to default, gross domestic product would fall by 4% and 6 million workers would lose their jobs, according to Moody’s projections. Even a brief default would result in the loss of 2 million jobs, according to the data.
In this scenario, US bond ratings would be classified as “restricted default”, according to Fitch Ratings, and Treasuries would be rated D until the US can borrow again. The Brookings Institution noted that a default could cause federal borrowing costs to rise by $750 billion over the next decade — a twist given that Republican spending and debt concerns have helped fuel the Borrowing Limit Deadlock.
Moreover, a default would undermine the US position on the world stage. U.S. Director of National Intelligence Avril Haines told the Senate Intelligence Committee last week that Russia and China would take advantage of the United States potentially defaulting on its debt. Haines warned that the two nations would try to highlight “the chaos in the United States, that we are not capable of functioning as a democracy.”
With tight margins in both houses of Congress, the stalemate is not new. But when it comes to default ultimatums, the president pleaded with lawmakers to engage in “normal arguments” instead.
“As I’ve said all along, we can debate where to cut, how much to spend, how to finally overhaul the tax system so that everyone pays their fair share or moves on, but not under the threat of default,” said Biden said on Friday. “Let’s remove the threat of default. Let’s have normal arguments. That’s why we have a budget process to be discussed openly so you can all see it.”
Schumer said Tuesday that it was not a fair negotiating tactic and that Democrats did not resort to it when former President Donald Trump was in office.
“When President Trump was president, I was the Democratic Minority Leader,” Schumer said. “I could have said that I want [the debt ceiling] hostage unless we repeal the Trump tax cuts, your signature issue. But McCarthy says I’m holding him hostage unless you repeal the IRA, which was our signature.”
Biden said he trusted McCarthy to do what he promised, but added the speaker was in a difficult position.
“I’m confident Kevin will try to do what he says,” Biden said. “I don’t know how much leeway Kevin McCarthy thinks he has in light of the fact, and I’m not a sage when I say this, it took him 15 votes to win the presidency and apparently he had to make some serious concessions to get him from the more extreme elements of his party. So I–I just don’t know.
But congressional Republicans are united in their refusal to vote to raise the limit without concessions. They view Tuesday’s meeting as a long-awaited face-to-face negotiation with the president.
If the meeting is indeed a negotiation, then the bill that House Republicans passed last month effectively serves as the GOP’s opening offer to the White House.
Dubbed the Limit, Save and Grow Act, the bill would impose sweeping cuts to federal discretionary spending, impose new work requirements on welfare recipients, and expand mining and fossil fuel production, all in exchange for an increase in the debt ceiling for about a year.
But rather than provide a starting point for talks, the GOP bill has so far served only as a political cudgel, energizing Democrats’ opposition to Republican demands.
In the Senate, Schumer has attacked the bill almost daily since its introduction.
The White House also pointed to some of the bill’s more conservative proposals and cuts as evidence that Republicans are willing to let the nation default in order to cut spending on key programs.