By Trevor Hunnicutt and Jeff Mason
WASHINGTON (RockedBuzz via Reuters) – President Joe Biden and Republican House Speaker Kevin McCarthy held initial talks Wednesday on raising the US government’s debt limits in a first test of how the two will work together, with both sides who agreed to talk more.
The White House said after the meeting that Biden told McCarthy he was eager to work with “good faith” Republicans. McCarthy said the two men could find common ground. But, as expected, there was no sign of an immediate breakthrough.
“The president and I had a good first meeting,” McCarthy told reporters after the meeting lasted more than an hour. He said the two men shared their perspectives with each other. “I think at the end of the day, we can find some common ground,” she said.
The Democratic president and Republicans, who won control of the US House of Representatives in November’s election, are locked in a deadlock over the federal government’s $31.4 trillion US debt ceiling hike. Otherwise, the world’s largest economy would be on the path to default.
“President Biden has made clear that, as every other leader of both parties in Congress has stated, it is their shared duty not to allow an unprecedented and economically catastrophic default,” the White House said in a statement. “It’s not negotiable or conditional.”
The Oval Office talks can serve as the opening bell for months of jockeying back and forth. Neither side expected a solution to emerge from a single meeting. Without action, the government could lose the ability to pay all its bills as early as June.
McCarthy expressed optimism that such a scenario could be avoided.
“I think if we can come to an agreement, we could have a funding deal for the next two years,” McCarthy said. “I told the president that I would like to see if we can reach an agreement well before the deadline.”
Biden said he wanted to see McCarthy’s budget plan. “Show me his budget!” he told reporters Tuesday when asked if he would negotiate with the House leader.
The White House said Biden is open to talks on deficit reduction unrelated to the debt ceiling debate. “The president welcomes a separate discussion with congressional leaders on how to reduce the deficit and control the national debt while continuing to grow the economy,” he said.
House Republicans want to use the debt ceiling as leverage to demand cuts, even if they have yet to unite around a specific plan. The increase covers the costs of spending programs and tax cuts previously approved by Congress, and is usually passed on a bipartisan basis.
CONTRAST
The 80-year-old president, a longtime former senator who served as vice president during a similar 2011 showdown that led to a historic downgrade in the federal government’s credit rating, enters talks with what some of his aides believe is a hand strong that includes a narrow Senate majority, a unified party on this issue, and a strong message to voters.
A speaker for less than a month, McCarthy, 58, leads a fractious Republican caucus in the House with a narrow majority of 222-212 that has given disproportionate influence to a small group of hardline conservatives.
Despite years of mingling with other Washington lawmakers, Biden has little personal history with McCarthy, who joined the Republican leadership on Capitol Hill under former President John Boehner after Biden already left to become Barack Obama’s running mate.
Only one in four Republicans serving in the House today retained their seats in 2011, and some may not be fully aware of the risks of courting default or the difficulties of negotiating in a divided government.
Congress has often imposed conditions on debt ceiling increases or coupled them with other tax and spending activities.
US DEBT IS DIFFERENT
Unlike most other developed countries, the United States sets a hard limit on how much it can borrow, and Congress must periodically raise that limit because the US government spends more than it receives.
Shortly before the White House meeting, Federal Reserve Chairman Jerome Powell told reporters, “There is only one way forward and that is for Congress to raise the debt ceiling.
“No one should assume that the Fed can protect the economy from the consequences of failing to act early,” Powell said.
The 2011 crisis was resolved with a bipartisan deal that cut spending and raised the debt limit, but left Obama administration officials sore. Many felt they had given up too much and still hurt the economy by letting the talks persist.
McCarthy has less wiggle room than his Republican counterpart in 2011.
To win the speaker’s gavel, he agreed to allow any single member to cast a vote to unseat him, which could lead to his ouster if he tries to work with the Democrats. He also put three hardliners on the Rules Committee, which would allow them to block any votes on a compromise.
Biden appeared to question McCarthy’s ability to keep Republicans in line at a fundraiser in New York on Tuesday, calling McCarthy “a decent man, I think,” but noting the concessions he’s made to becoming a speaker.
McCarthy, for his part, said Biden had to be willing to make concessions to get a debt ceiling increase through Congress, saying it would be “irresponsible” not to negotiate.
(Reporting by Trevor Hunnicutt and Jeff Mason; Additional reporting by David Morgan; Editing by Scott Malone, Heather Timmons, Howard Goller, Alistair Bell and Daniel Wallis)
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