McCarthy And Biden Had ‘Very Good Discussion,’ Speaker Says—But No Deal Yet

Topline

House Speaker Kevin McCarthy (R-Calif.) said Wednesday he had a productive meeting with President Joe Biden about raising the debt ceiling, telling reporters he believes he “can find common ground” with the president as part of an agreement to raise the threshold and avert a potentially disastrous default.

Key Facts

McCarthy told reporters outside the White House following a roughly hour-long meeting with Biden that the two “have different perspectives,” but he’s hopeful they can reach a deal to raise the debt ceiling “long before” a default, which could take place in June if Congress fails to raise the cap on borrowing.

McCarthy said major spending cuts must be part of any agreement for House Republicans to raise the debt ceiling, but he refused to say whether he proposed any cuts to the White House, other than reiterating Social Security and Medicare will remain fully funded.

The White House had a much more subdued reaction compared with McCarthy’s upbeat outlook, saying in a statement the two sides “had a frank and straightforward dialogue.”

The statement made no direct mention of the debt ceiling, instead saying, “The President welcomes a separate discussion with congressional leaders about how to reduce the deficit and control the national debt while continuing to grow the economy.”

Biden has repeatedly said in the past he will not negotiate spending cuts in exchange for raising the debt ceiling.

Crucial Quote

“I can see where we can find common ground. I think the American public would appreciate that,” McCarthy said.

What To Watch For

McCarthy ruled out creating a commission to determine possible spending cuts in a debt ceiling deal. “I don’t need a commission to tell me where there’s waste, fraud and abuse,” he said.

Key Background

The U.S. hit its $31.4 trillion debt ceiling on January 12, which has led Treasury Secretary Janet Yellen to take “extraordinary measures”—like pausing some new investments—to avoid a default. Yellen said she believes the actions will stave off a default until June 5, dubbed the “X-date” for the debt ceiling. If an agreement is not reached by then, the federal government will be unable to pay its bills for the first time in U.S. history, likely sending the stock market plummeting and causing a recession. The debt ceiling negotiations are politically perilous for McCarthy, who is contending with a razor-thin GOP House majority that includes some hard-right lawmakers who want spending cuts in exchange for a debt ceiling increase.

Tangent

Senate Minority Leader Mitch McConnell (R-Ky.) said last week he will not have a hand in debt ceiling negotiations. “I can’t imagine any kind of debt ceiling measure that could pass the Senate that would also pass the House,” he told reporters. Republicans control the House, while Democrats hold a narrow majority in the Senate.

Further Reading

Debt Ceiling Standoff: Speaker McCarthy Says He Will Meet With Biden For Solution (Forbes)

McCarthy Promised No Social Security Cut In Debt Ceiling Deal, Manchin Says (Forbes)

The Debt Ceiling, Explained—What Happens If The U.S. Doesn’t Raise It (Forbes)

Federal Government Officially Reaches Debt Limit, Triggering ‘Extraordinary Measures’ To Prevent A Default—Here’s What That Means (Forbes)

McConnell Says It’s McCarthy’s Job To Reach Debt Ceiling Deal (Forbes)