WASHINGTON — Top congressional leaders left a high-stakes meeting with President Joe Biden on Tuesday showing few signs they had moved closer to resolving a debt ceiling impasse and removing the looming threat of a default.
The officials plan to meet again Friday as Washington scrambles to lift the debt ceiling with less than a month before the federal government is set to run out of money. Biden met with House Speaker Kevin McCarthy, R-Calif., and Minority Leader Hakeem Jeffries, D-N.Y., along with Senate Majority Leader Chuck Schumer, D-N.Y., and Minority Leader Mitch McConnell.
McCarthy told reporters he did not see “any new movement” in negotiating positions over the debt limit during the meeting.
“Everybody in this meeting reiterated the positions they were at,” before the meeting, McCarthy said outside the White House.
“I asked [Biden] numerous times if there were places we could find savings,” in the federal budget, said McCarthy. “He wouldn’t give me any.”
Every leader present except for McCarthy agreed to remove the threat of default when asked by Biden, according to Democratic leaders at the meeting.
“We explicitly asked Speaker McCarthy, ‘Would he take default off the table?’ He refused,” said Schumer. “Instead of him giving us a plan to remove default he gave us a plan to take default hostage. And that is a shame, because it makes things more complicated.”
Schumer called on McCarthy to negotiate proposed spending cuts through the usual budgetary process without threatening default.
“There are large differences between the parties. If you look at what President Biden had proposed and you look at what Speaker McCarthy has proposed, they’re very, very different,” Schumer said. “We can try to come together on those in a budget and appropriations process but to use the risk of default, with all the dangers that has to the American people, as a hostage and say it’s my way or no way, or mostly my way or no way, is dangerous.”
McConnell joined McCarthy outside the White House, where he reiterated that Congress would not allow the country to default on its debt.
“The United States has never defaulted on its debt and it never will,” said McConnell. Still, “there must be an agreement … and the sooner the president and the speaker can reach an agreement the sooner we can solve the problem.”
Jeffries, speaking to reporters after the meeting, framed House Republicans as the only group that would not rule out the prospect of a first-ever default on U.S. debt.
“House Democrats have taken default off the table; Senate Democrats have taken default off the table; Senate Republicans, as just indicated by Leader McConnell, have taken default off the table; President Biden from the very beginning took default off the table,” Jeffries said. “There’s one group in Washington, D.C., extreme MAGA Republicans, who have indicated they are willing to take us down a path of default. That is reckless, irresponsible and extreme.”
Lifting the debt ceiling is necessary for the government to cover spending commitments already approved by Congress and the president and prevent default. Doing so does not authorize new spending. But House Republicans have said they will not lift the limit if Biden and lawmakers do not agree to future spending cuts.
The White House has stressed that while it is open to discuss spending cuts, it will not negotiate with Republicans on the debt ceiling. The Biden administration has said the GOP has a constitutional responsibility to raise the borrowing limit.
“Those two are totally unrelated. Whether you pay the debt or not, doesn’t have a damn thing to do with what your budget is,” Biden said Friday. “They’re two separate issues — two. Let’s get it straight.”
The Treasury Department has started to take extraordinary steps to keep paying the government’s bills, and expects to be able to avoid a first-ever default at least until early June. Treasury Secretary Janet Yellen warned Monday that failure to hike the debt ceiling would cause an “economic catastrophe.”
Defaulting on sovereign debt would wreak havoc on the economy and roil markets around the world. A Moody’s report last year said a default on Treasury bonds could throw the U.S. economy into a tailspin as bad as the Great Recession.
If the U.S. were to default, gross domestic product would drop 4% and 6 million workers would lose their jobs, Moody’s projected. Even a brief default would lead to the loss of 2 million jobs, according to the data.
In that scenario, U.S. bond ratings would be classified as “restricted default,” according to Fitch Ratings, and Treasurys would have a D rating until the U.S. could once again borrow. The Brookings Institution noted a default could lead to $750 billion in higher federal borrowing costs over the next decade — a twist given that Republican concerns about spending and debt have helped to fuel the borrowing-limit stalemate.
What’s more, a default would shake the U.S. position on the world stage. U.S. Director of National Intelligence Avril Haines told the Senate Intelligence Committee last week that Russia and China will take advantage of the U.S. potentially defaulting on its debt. Haines warned the two nations would attempt to highlight “the chaos within the United States, that we’re not capable of functioning as a democracy.”
With tight margins in both chambers of Congress, gridlock is nothing new. But when it comes to default ultimatums, the president has pleaded with lawmakers to engage in “normal arguments” instead.
“As I’ve said all along, we can debate where to cut, how much to spend, how to finally overhaul the tax system to where everybody has to pay their fair share or continue the route their on, but not under the threat of default,” Biden said on Friday. “Let’s remove the threat of default. Let’s have normal arguments. That’s why we have a budget process to debate in the open so you all can see it.”
Schumer on Tuesday said it wasn’t a fair negotiating tactic and not one Democrats used when former President Donald Trump was in office.
“When President Trump was president, I was Democratic Minority Leader,” Schumer said. “I could have said I’m holding [the debt ceiling] hostage unless we repeal the Trump tax cuts, your signature issue. But McCarthy is saying I’m holding it hostage unless you repeal the IRA, which was our signature issue.”
But congressional Republicans are united in their refusal to vote to raise the limit without concessions. They view Tuesday’s meeting as a long-awaited face-to-face negotiation with the president.
If the meeting is indeed a negotiation, then the bill House Republicans passed last month effectively serves as the GOP’s opening offer to the White House.
Dubbed the Limit, Save and Grow Act, the bill would impose sweeping cuts to federal discretionary spending, impose new work requirements for welfare recipients and expand mining and fossil fuels production, all in exchange for raising the debt limit for about a year.
But rather than provide a jumping off point for talks, the GOP bill has so far served only as a political cudgel, energizing Democrats’ opposition to Republican demands.
In the Senate, Schumer has attacked the bill on a near-daily basis ever since it was introduced.
The White House also has pointed to some of the the bill’s most conservative proposals and cuts as evidence that Republicans are willing to let the nation default in order to slash spending from key programs.