Biden Wants A Default—Not A Deal

Topline

House Speaker Kevin McCarthy (R-Calif.) gave a pessimistic outlook Monday about the ongoing debt ceiling talks, a day after the Biden Administration suggested the negotiations had made some progress—indicating the two sides are still locked in disagreement as lawmakers face a two-week estimated deadline before the Republican-controlled House will allow the U.S. to run out of cash.

President Joe Biden meets with Speaker of the House Kevin McCarthy and Senate Majority Leader Chuck … [+] Schumer in the Oval Office of the White House on Tuesday, May 9, 2023. Biden and Republican leaders met in hopes of breaking an impasse over the U.S. debt limit. House Minority Leader Hakeem Jeffries and Senate Minority Leader Mitch McConnell were also in attendance.

Demetrius Freeman/The Washington Post via Getty Images

Key Facts

McCarthy accused the White House and Democratic congressional leaders of wanting to “look like they’re in a meeting,” when really, “they’re not talking [about] anything serious,” he told reporters Monday, adding “it seems more like they want a default than a deal.”

McCarthy said he wanted the two sides to reach a deal by “this weekend,” alluding to the scheduling hurdles Congress faces to pass a bill before the early June deadline Treasury Secretary Janet Yellen and the Congressional Budget Office have set for when the U.S. could run out of cash to pay its bills.

The speaker’s viewpoint contradicts those of Yellen and President Joe Biden, who both indicated Sunday that talks were making some progress—Yellen told Reuters she was “hopeful” the two sides would come to a consensus, and Biden said, “I really think there is desire on their part as well as ours to reach an agreement.”

Biden, however, told reporters, “No,” when asked Monday if there was any progress on the debt ceiling talks over the weekend.

Chief Critic

The looming debt ceiling crisis is heightening concerns among business leaders as Wall Street has maintained a largely muted stance amid the stalemate on Capitol Hill. “The short clock and possibility of miscalculation pose the greatest risk for default,” U.S. Chamber of Commerce Executive Vice President Neil Bradley told the Wall Street Journal, while criticizing the White House and congressional leaders for failing to meet earlier.

Key Background

Biden and McCarthy met for the first time since February last week to discuss raising the federal debt limit—which Biden has said repeatedly he will refuse to do if any other conditions are attached. But McCarthy and Republicans are pushing for a long list of spending cuts and policy changes in exchange for lifting the borrowing threshold. The House passed legislation last month that would raise the borrowing limit by $1.5 trillion through March of next year, impose $4.5 trillion in federal spending cuts over the next decade and eliminate programs championed by the Biden Administration, including its student loan forgiveness program and rolling back unspent Covid-19 funding. The bill is a non-starter in the Democratic-controlled Senate, however, and Biden has threatened to veto the legislation if it reaches his desk.

What To Watch For

How scheduling conflicts will impact the ongoing debt ceiling negotiations. Biden’s meeting with congressional leaders scheduled for last Friday was postponed after Senate Minority Leader Mitch McConnell (R-Ky.) said he had a personal scheduling conflict, the Wall Street Journal reported. Biden said over the weekend a rescheduled meeting could happen as early as Tuesday, before he leaves for a weeklong overseas trip, which the White House said Friday he still plans to take. Meanwhile, the House and Senate are simultaneously in session for just one more week this month.

Tangent

The White House and Democrats have indicated they are open to some concessions, including a two-year cap on federal spending, according to the Journal, citing people briefed on the matter who said the talks became more serious last week. Progressives are largely opposed to any spending caps, however, while Republicans are pushing to limit any budget growth for the next ten years. Rescinding unspent Covid-19 funding and fast-tracking the permitting process for new energy projects are reportedly other areas the White House and Democrats seem to be open to negotiating on.

Biden Wants A Default—Not A Deal—On Debt Ceiling