Debt Ceiling Talks Resume as McCarthy, Biden Prepare to Meet Monday to Resolve Standoff

Debt ceiling talks between House Republicans and the White House resumed on Sunday at the Capitol as both sides race to strike a compromise on the budget along with a deal to raise the nation’s borrowing limit and avoid an economy-wrecking federal default.

GOP House Speaker Kevin McCarthy and President Joe Biden spoke Sunday by phone while the president was returning on Air Force One following the Group of Seven summits in Japan. An upbeat McCarthy told reporters at the Capitol that the call between the two was “productive” and that the on-and-off negotiations between White House representatives and his staff are focused on spending cuts.

Speaker McCarthy and the president are set to meet again for a pivotal meeting at the White House Monday.

Negotiators for the Republican speaker and the Democratic senator met as talks appeared to focus on the 2024 budget yearly cap, which is crucial to resolving the standoff. They face a deadline, possibly as early as June 1, when the government could run out of funds to pay its bills. Janet Yellen, Treasury Secretary, said Sunday that June 1 remains a “hard deadline.”

McCarthy said after his call with President Biden, “I think we can solve some of these problems if he understands what we’re looking at.

“But I’ve been very clear to him from the very beginning. We have to spend less money than we spent last year,” the speaker added.

Speaker McCarthy emerged from the conversation sounding optimistic and was cautious not to criticize the president’s trip but cautioned, “There’s no agreement on anything.”

“We’re looking at, how do we have a victory for this country?” said McCarthy. He said he didn’t think the final legislation would remake the country’s debt and the federal budget but at least “put us on a path to change the behavior of this runaway spending.”

The White House confirmed the late Sunday talks and the Monday meeting but did not elaborate on the leaders’ call.

Earlier, the president used his news conference in Hiroshima, Japan, to warn House GOP members they must move away from their “extreme positions” over raising the debt limit and that no agreement would be reached to avoid a disastrous default only on their terms.

Biden said, “It’s time for Republicans to accept that there is no deal to be made solely, solely, on their partisan terms.” The president said he had done his part in lifting the borrowing limit so the government could continue to pay its bills by agreeing to severe cuts in spending. “Now, it’s time for the other side to move from their extreme position.”

The president had been scheduled to travel from Hiroshima to Australia and Papua New Guinea but cut his trip short in response to the continually strained negotiations with Capitol Hill.

A new wave of tax revenue is expected soon, giving both sides additional time to negotiate. On “Meet the Press,” Yellen said, “The odds of reaching June 15, while being able to pay all of our bills, is quite low.”

Republicans want Medicaid work requirements, cuts to IRS, sparing Defense and Veterans cuts

Republican lawmakers are holding on tight to demands for steep spending cuts with caps on future spending and rejecting the proposed alternatives proposed by the White House for lowering deficits in part with tax revenue.

The GOP wants to roll back next year’s spending to 2022 levels; however, the White House has proposed keeping 2024 spending the same as it is in the 2023 budget year.

Initially, Republicans sought to impose spending caps for ten years, although the most recent proposal narrowed it to around six. The White House wants a budget deal of two years.

The GOP wants work requirements on the Medicaid health care program and additional cuts to food aid by restricting the ability of states to waive work requirements in places with high joblessness.

Republican lawmakers are seeking cuts in IRS spending and sparing Veterans and Defense accounts from reductions, which would shift the bulk of spending reductions to other federal programs.

The White House countered by keeping nondefense and defense spending flat next year, which could save $90 billion in the budget year 2024 and $1 trillion over ten years.

For months, the president had refused to discuss the debt limit, contending that GOP members in Congress were trying to use the borrowing limit vote to get concessions from the administration on other policy priorities.