Ahead of Tuesday’s scheduled meeting between Democrat Biden, McCarthy and the other three top leaders in Congress, the two sides did not appear close to an agreement. The White House did not rule out annual spending caps that Republicans say must accompany any increase in the country’s debt limit, set at $31.4 trillion.
Meanwhile, Republicans, who control the House, would not insist on other conditions the White House has deemed off-limits, such as the repeal of green energy incentives in Biden’s 2022 Inflation Reduction Act. .
Biden told reporters on Sunday that he thought both sides wanted to reach an agreement. “I think we can do it,” he said.
McCarthy was much more pessimistic when he arrived at the Capitol on Monday. “I still think we’re a long way off,” he told reporters. “They want to look like they’re participating in a meeting, but they’re not. They’re not taking anything seriously.”
Biden will meet with McCarthy; Democratic Senate Majority Leader Chuck Schumer; the top Republican in the Senate, Mitch McConnell; and the top Democrat in the House of Representatives, Hakeem Jeffries, on Tuesday, a day before he was due to leave for a Group of Seven (G7) meeting in Japan.
The trip will give both sides little time to reach an agreement before the United States runs out of money to pay its bills, which Treasury officials say could happen as early as June 1.
According to economists, the first default in US history would plunge the country into a recession and inject chaos into global financial markets, and the stagnation has begun to worry investors and consumers.
Biden has insisted that Congress increase the country’s borrowing capacity with no strings attached, but the White House says it is also willing to discuss budget issues with House Republicans.
House Republicans passed legislation in April that combines a $1.5 trillion debt limit increase with $4.8 trillion in spending cuts, achieved largely by reducing annual discretionary spending in 8% next year and limiting growth in subsequent years.
Democrats say they won’t go along with other elements of that legislation, such as repealing Biden’s student loan forgiveness initiative and increasing work requirements for some benefit programs, but have not ruled out limiting spending.