Biden and McCarthy engage in ‘productive’ and ‘candid’ debt-limit talks as fiscal cliffs loom

WASHINGTON — President Joe Biden and Speaker of the US House of Representatives Kevin McCarthy gathered behind closed doors at the White House on Wednesday for the first of several conversations as the country approaches two financial cliffs this year amid a divided government.

The big question at the moment is when and how to resolve the country’s borrowing ceiling, known as the debt limit, before the expected summer deadline.

Biden remains adamant he will not negotiate a debt ceiling with Republicans and that public spending talks should move in a separate direction.

But the two questions are linked for McCarthy and many GOP members who want to see a spending cut deal before they vote for a debt cap that gives borrowing power for spending already approved by Congress.

“It was very clear to me that we would not pass the net debt ceiling. We won’t spend more next year than we spent this year,” McCarthy told reporters after the meeting, linking two separate issues – the debt limit and government spending.

“Productive Conversation”

McCarthy said he would like to ensure that Republicans and Democrats in the House of Representatives, who control the Senate and the White House, know what they are going to spend on over the next two fiscal years.

McCarthy said he didn’t want to give the “wrong impression” of the meeting with Biden, which lasted just over an hour, but said the conversation was better than he thought.

“I think it was a very productive conversation,” McCarthy said. “You know, in all of these different things, if you had a productive conversation and both of you walked away saying, ‘Let’s continue,’ that’s positive for today.”

Biden called McCarthy a “decent man” during a Tuesday night fundraiser in New York, though he questioned deals made by McCarthy to hold the speaker’s gavel. Before McCarthy’s election, 15 ballots were held.

“Look what he had to do,” Biden said. “He had to make commitments that are simply unthinkable for the speaker of the House of Representatives in terms of being able to become a leader.”

The “minutes” of the White House meeting said that Biden and McCarthy “had a frank and direct dialogue.”

“The President welcomes a separate discussion with Congressional leaders on how to cut the deficit and control the public debt while keeping the economy growing. This conversation should build on the president’s leadership in achieving a record $1.7 trillion deficit reduction in his first two years in office.”

Schumer calls for GOP plan

Senate Majority Leader Chuck Schumer, a New York Democrat, said Wednesday morning that Republicans in the House of Representatives are “struggling to face the harsh reality of being in the majority – there’s no good substitute for a plan.”

“This is especially true when it comes to debt ceilings,” Schumer said. “For several days, Speaker McCarthy has been touting this meeting as a sort of major victory in the debt ceiling negotiations, but Speaker McCarthy is forgetting something that is obvious to everyone else; if you don’t have a plan, you can’t seriously pretend to be in real negotiations.”

Schumer said the Democrats’ plan is to “raise the debt ceiling without brinkmanship or hostage-taking as has been done in the past.”

Schumer’s comments came at about the same time that Republicans in the House of Representatives were gathering behind closed doors in the basement of the US Capitol Building to discuss their plans for a debt limit and possible talks with Democrats.

House Budget Chairman Jody Arrington said after the meeting that he believed McCarthy had told Biden more details than he was willing to discuss publicly, and that the invitation was a victory for the Republicans.

“I think the first goal was to make sure we got our fellow Democrats around the negotiating table about raising the debt limit responsibly,” Arrington said.

The Texas Republican said it would be irresponsible and reckless to “simply miss this opportunity and raise the net debt ceiling without thinking about spending cuts or other fiscal reforms.”

“That was his position. That was my position,” Arrington said. “And I think we can already say that we have one step to success and one step in the right direction, because the president is talking to the speaker.”

emergency measures

The US hit a $31.385 trillion debt ceiling in mid-January, after which the Treasury Department used accounting maneuvers called emergency measures to continue paying all of the country’s bills in full and on time.

Secretary of State Janet Yellen expects powers to end sometime this summer, but not until early June, giving Congress and the Biden administration time to pass legislation to address the debt limit.

Senate Minority Leader Mitch McConnell, a Republican from Kentucky, confirmed on Tuesday that McCarthy and Biden should broker a debt-limit deal this time.

“I think it’s clear that a deal needs to be struck between a majority in the House of Representatives and a Democratic president to have a chance of surviving here,” McConnell said. “We all support Kevin and wish him the best of luck in the negotiations.”

While McConnell has largely shied away from negotiations on a debt limit, 24 of its members sent a letter to Biden last week to express support for combining “deficit-cutting structural spending reform” with a debt-limit suspension law.

Tennessee Senator Marsha Blackburn, Indiana Senator Mike Brown, Alabama Senator Cathy Britt, North Carolina Senator Ted Budd, Idaho Senator Mike Crapo, Iowa Senator Joni Ernst, Nebraska Senator Deb Fisher, Wisconsin Senator Ron Johnson, Oklahoma Senator James Lankford, Kansas Senator Roger Marshall, Kentucky Senator Rand Paul, Nebraska Senator Pete Ricketts, Idaho Senator James Rish, Florida Senator Rick Scott, Missouri Senator Eric Schmitt, Alabama Senator Tommy Tuberville, and Ohio Senator. JD Vance was among the Senate Republicans who signed the letter.

Speaking from the Senate floor on Wednesday morning, McConnell said it was “correct, appropriate and perfectly normal that our need for a debt limit increase would be accompanied by negotiations on” government spending.

budget resolution

Florida Rep. Byron Donalds said Wednesday morning after a closed GOP meeting that it is “possible” that the party will put forward its full debt cap proposal in a fiscal year 2024 budget resolution likely to be released in April.

That tax and spending plan, which is being introduced as a side resolution rather than a bill, would have to include House Republicans’ plans for defense spending, a topic Donalds said the party hasn’t talked about yet. However, several senior Republicans have said the party has no intention of cutting defense spending.

Donalds also said it would be difficult to try to balance the budget resolution by cutting only domestic discretionary spending.

“It complicates. You have to have some things like growth projections,” Donalds said. “What we’re going to do about tax policy over the next decade because the Tax Cuts and Jobs Act is starting to expire and that’s something we have to decide.”

Discretionary spending annually funds the vast majority of federal departments and agencies, including the departments of agriculture, defense, energy, homeland security, and veterans’ affairs.

While Republicans have taken Medicare and Social Security spending off the table, Donalds said, it was unclear if they would move to restructure Medicaid, the health care program for people with low incomes and people with disabilities.

These three programs basically operate on auto-pilot, which means that payments and increases in the total amount of funding required occur unless Congress intervenes.

Oklahoma Rep. Tom Cole, chairman of the rules committee, said the GOP meeting in the House on Wednesday morning was “a really good educational meeting.”

Cole, who also chairs the appropriations subcommittee that funds the Departments of Transportation and Housing and Urban Development, said he expects House Republicans to take action to curb discretionary spending over the next fiscal year.

“I suspect we will put a hold on discretionary spending,” Cole said. “Probably at worst, from a Republican perspective, you end up in CR, so it won’t rise. He will stay where he is. So we’re going to make progress.”

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