WASHINGTON, D.C. — Negotiations over how to raise the debt limit went well into the night at the Capitol on Monday. There are just days to go before the country potentially runs out of money, with experts saying a default would be catastrophic for the economy.
The government could run out of cash to pay its bills as soon as June 1, but President Joe Biden and House Speaker Kevin McCarthy (R-CA) seemed optimistic talks were moving in the right direction.
“We still have some disagreements, but I think we may be able to get where we have to go. We both know we have a significant responsibility,” President Biden said while sitting with McCarthy at the White House.
McCarthy has lamented over how Biden waited until the last minute to start talks over how to raise the debt ceiling. Still, he was optimistic a deal would get done.
“I felt we had a productive discussion, we don’t have an agreement yet, but I did feel the discussion was productive in areas where we have differences of opinion,” McCarthy said after the meeting.
There are reportedly multiple terms both sides are trying to come to a consensus on. Biden hopes to tie spending cuts in the budget to new tax hikes. It’s a nonstarter for Republicans.
“What I sense from the White House is a lack of urgency. I’m chair of the Financial Services Committee. I’m worried about the impacts on the markets. To play brinkmanship is not wise when it comes to where we are with the banking system, the economy,” Rep. Patrick McHenry (R-NC) told reporters after Monday’s meeting. McHenry is one of McCarthy’s negotiators working with the White House.
Some House Democrats have been trying to recruit moderate Republicans for a potential work-around for the impasse. House Democrat leader Hakeem Jeffries (D-NY) said Republicans rejected a spending freeze deal from Biden that would have kept spending at the current level. House Republicans want to revert government spending to 2022 levels and limit how much it can grow in future years.
“What has been reasonable is what President Biden has put on the table and that’s been rejected, because apparently House Republicans have said they will accept nothing short of their extreme ‘Default on America Act,'” Jeffries said.
Both the President and House Speaker are toeing the line with the most hardline wings of their parties. McCarthy has been encouraged by members of the House Freedom Caucus to stop negotiating and pressure the Senate to pass the House’s debt bill. Any bill would need to pass both chambers.