Biden, House Speaker McCarthy to speak on debt limit
US President Joe Biden will hold a call with House Speaker Kevin McCarthy about budget negotiations and raising the US$31.4 trillion federal debt ceiling from his flight back from Japan aboard Air Force One, said a person familiar with the matter.
The call, which will take place on Sunday (May 21) morning Eastern time, comes as talks reached an impasse with time running out to avoid default. Treasury Secretary Janet Yellen has said the US could run out of cash to meet its obligations as soon as Jun 1.
Biden, who is travelling in Japan for the Group of Seven (G7) summit, sought the call after his negotiating team briefed him on the status of talks that broke up on Friday with no signs of progress, according to a White House official.
There are less than two weeks before Jun 1, when the US Treasury Department has warned that the federal government could be unable to pay all its debts. That would trigger a default that could cause chaos in financial markets and spike interest rates.
Officials did not meet on Saturday, and they announced no progress from their prior meetings on Friday or any plan to talk again. Instead, both sides cast the other’s proposals as too extreme.
White House Press Secretary Karine Jean-Pierre noted in a statement that Biden and McCarthy, the speaker of the House of Representatives, had agreed that any budget agreement would need to be bipartisan and accused Republicans of offering proposals too far to the right to pass Congress.
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Late Saturday afternoon, McCarthy told reporters at the Capitol that he did not think talks could move forward until Biden was back in the country from the G7 meeting. He accused Democrats of taking a position that was too extreme towards the left.
“We’re going to get a chance to talk later today,” Biden told reporters on Sunday. When asked what message he would share with McCarthy, he declined to comment before talking with McCarthy first.
Biden on Sunday raised the prospect that he might invoke constitutional powers to prevent a damaging US default, as talks with Republican opposition leaders were locked in stalemate.
“I can’t guarantee that they wouldn’t force a default by doing something outrageous,” he said at a press conference at the G7 summit in Hiroshima. “I’m looking at the 14th amendment as to whether we have the... legal authority” to bypass Congress, he added, referring to a clause that states the validity of public debt “shall not be questioned”.
A source familiar with the negotiations said Republicans had proposed an increase in defence spending, while cutting overall spending. The source also said House Republicans want to extend tax cuts passed under former president Donald Trump, which would add US$3.5 trillion to the federal debt.
The source said the Biden administration had proposed keeping non-defence discretionary spending flat for the next year, which would cut spending when adjustments are made for inflation.
A different person familiar with the talks said Republicans’ latest proposal included “steep” cuts over a longer period of time than recent budget deals as well as a variety of measures that irk Democrats, including work requirements for aid, cuts to food assistance and less money for the tax-collecting Internal Revenue Service.
The source said Republicans had also rejected Democrats’ proposed measures to raise revenue, including drug payment reforms and closing “tax loopholes”.
White House officials said they were expecting the call between Biden and McCarthy would take place on Sunday morning, Washington time, as Biden flew home on Air Force One from the G7 meetings in Japan.
Biden will be headed back to Washington on Sunday after cutting his trip to Asia short to focus on the debt limit talks. Biden is also set to hold a press conference prior to his departure from Japan.
McCarthy’s office did not immediately respond to a request for comment.
The Republican-led House last month passed legislation would cut a wide swath of government spending by 8 per cent next year. Democrats said that would force average cuts of at least 22 per cent on programmes such as education and law enforcement, a figure that top Republicans have not disputed.
Republicans hold a slim majority of seats in the House and Biden’s fellow Democrats have narrow control of the Senate, so no deal can pass without bipartisan support.
US Representative Patrick McHenry, a Republican negotiator, had said Republicans leaders were “going to huddle as a team and assess” where things stood.
Republicans are pushing for sharp spending cuts in many domestic programmes in exchange for the increase in the government’s self-imposed borrowing limit, which is needed regularly to cover costs of spending and tax cuts previously approved by lawmakers.
Congressional Republicans voted to raise the debt ceiling three times, with no budget cut pre-conditions, when Republican President Donald Trump was in the White House. BLOOMBERG, REUTERS
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