UPDATED 6:06 P.M.
WASHINGTON (Reuters) – President Joe Biden and top lawmakers failed to break a deadlock on Tuesday in face-to-face talks over raising the $31.4 trillion U.S. debt limit but vowed to meet again with just three weeks before the country may be forced into an unprecedented default.
After about an hour of talks in the Oval Office, Biden, a Democrat, and House of Representatives Speaker Kevin McCarthy, a Republican, showed no signs of softening their positions as a default looms as early as June 1. But talks among aides may continue as soon as Tuesday night on the federal budget.
Biden called the meeting “productive” and reported that McCarthy said during the meeting that the U.S. would not default on its debt. “Everyone in the meeting understood the risks of default,” Biden said.
McCarthy underscored a lack of progress. “I didn’t see any new movement,” McCarthy told reporters after the meeting, complaining that Biden didn’t agree to talks until time was running out. “That’s not a way to govern,” he said. The White House, he said “has no plan B.”
But he said the two sides agreed for their staff to get together this week, and for the principals to meet again on Friday to continue talking.
The two sides exchanged blame after the meeting.
Senate Majority Leader Chuck Schumer, a Democrat, faulted McCarthy for refusing to take default off the table. Top House Democrat Hakeem Jeffries said Republicans had waited for weeks to publish a budget. And Mitch McConnell, the Senate minority leader and a Republican, told reporters that Biden needed to get serious about negotiations.
Economists warn that a lengthy default could send the American economy into a deep recession with soaring unemployment while destabilizing a global financial system built on U.S. bonds. Investors are bracing for impact.
Biden is calling on lawmakers to raise the federal government’s self-imposed borrowing limit without conditions. McCarthy has said his chamber will not approve any deal that doesn’t cut spending to address a growing budget deficit and signaled that he doesn’t see a short-term fix.
Past debt ceiling fights have typically ended with a hastily arranged agreement in the final hours of negotiations, thus avoiding a default. In 2011, the scramble prompted a historic downgrade of the country’s top-notch credit rating. Veterans of that battle warn the current situation is riskier because political divides have widened.
Tuesday’s meeting was closely watched ahead of what is expected to be a fraught period in Washington with the approach of June, when the U.S. Treasury predicts the country could be forced to default on some debts.
McCarthy, whose party holds only a slim majority in the House, wants to tie a vote on the debt ceiling to broad spending cuts the White House considers draconian.
Biden’s meeting with the speaker was their first since Feb. 1.
Earlier Tuesday, McCarthy and the White House separately appeared to close the door to a short-term solution that’s been widely discussed on Capitol Hill: lifting the debt ceiling through September to allow more time for agreement.
INVESTORS WATCH CLOSELY
Neil Bradley, top policy official at the U.S. Chamber of Commerce, the nation’s largest business association, said it was positive that the two sides would continue meeting. “But we cannot stress enough that time is short, with each passing day increasing the risk for a misstep resulting in a default.”
Few countries in the world have debt ceiling laws, and Washington’s periodic lifting of the borrowing limit merely allows it to pay for spending Congress has already authorized.
Biden would agree to a separate discussion on the budget but not tied to the debt ceiling, the White House said.
The start of active talks could nonetheless soothe the nerves of investors who last week forced the federal government to pay its highest interest ever for a one-month debt issue.
Prices for short-term Treasury bills fell on Tuesday as investors sold off debt that could come due around the time the U.S. debt limit could be hit.
Biden’s foreign travel plans and House and Senate recesses mean there are just seven days when all three parties are scheduled to be in town before June 1.
Treasury Secretary Janet Yellen on Monday said a failure to raise the debt limit would hurt the U.S. economy and weaken the dollar as the world’s reserve currency. Treasury cash is dwindling as the extraordinary measures it is taking are exhausted.
White House officials have discussed whether Biden has the authority to lift the debt limit on his own by invoking the U.S. Constitution’s 14th amendment, but Biden told MSNBC last week that “I’ve not gotten there yet” on this argument.
The 14th amendment says the validity of the public debt of the United States “shall not be questioned.” Invoking it could trigger a legal challenge.
(Reporting By Steve Holland; Additional reporting by Trevor Hunnicutt, David Morgan, Moira Warburton, Katharine Jackson, and Nandita Bose; Writing by Trevor Hunnicutt; Editing by Heather Timmons, Alistair Bell, Leslie Adler, Jonathan Oatis and Cynthia Osterman)
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UPDATED 4:10 P.M.
WASHINGTON (Reuters) – President Joe Biden and top lawmakers met face-to-face on Tuesday as a deadlock over raising the $31.4 trillion U.S. debt limit threatened to push the country into an unprecedented default in as soon as three weeks if Congress does not act.
Biden, a Democrat, told reporters he would not make comments as House of Representatives Speaker Kevin McCarthy, a Republican, sat in the Oval Office after both sides suggested they would not agree to concessions to head off a default as early as June 1.
“We’re going to get started and solve all the world’s problems,” Biden quipped, declining to take reporters’ questions or to offer his guests an opportunity to speak.
The leaders were grouped along party lines, with McCarthy sitting silently on one couch with Senate Republican leader Mitch McConnell. Top House Democrat Hakeem Jeffries was joined by fellow Democrat Senate Majority Leader Chuck Schumer on the opposite couch. Biden sat in a chair between them.
Biden was joined for the talks by five senior aides, including Chief of Staff Jeff Zients, budget director Shalanda Young and longtime adviser Steve Ricchetti, according to the White House. The congressional leaders each brought a single aide of their own.
Economists warn that a lengthy default could send the American economy into a deep recession with soaring unemployment while destabilizing a global financial system built on U.S. bonds. Investors are bracing for impact.
Biden is calling on lawmakers to raise the federal government’s self-imposed borrowing limit without conditions. McCarthy has said his chamber will not approve any deal that doesn’t cut spending to address a growing budget deficit and signaled that he doesn’t see a short-term fix.
Past debt ceiling fights have typically ended with a hastily arranged agreement in the final hours of negotiations, thus avoiding a default. In 2011, the scramble prompted a historic downgrade of the country’s top-notch credit rating. Veterans of that battle warn the current situation is riskier because political divides have widened.
Tuesday’s meeting was likely to be closely watched ahead of what’s expected to be an increasingly fraught period in Washington, ahead of June, when the U.S. Treasury predicts the country could be forced to default on some debts.
McCarthy, whose party holds only a slim majority in the House, wants to tie a vote on the debt ceiling to broad spending cuts the White House considers draconian.
Biden’s meeting with the speaker was their first since Feb. 1.
Earlier Tuesday, McCarthy and the White House separately appeared to close the door to a short-term solution that’s been widely discussed on Capitol Hill: lifting the debt ceiling through September to allow more time for agreement.
Before the Oval Office meeting, McConnell said Biden should look for middle ground with McCarthy. “Sit down with the speaker, strike a deal,” he said on the Senate floor on Tuesday.
INVESTORS, CEOS WATCH MEETING CLOSELY
The U.S. Chamber of Commerce, the nation’s largest business association, on Tuesday urged a “swift” bipartisan agreement on the debt limit that would also include energy project permitting reform and an agreement on discretionary spending caps.
Few countries in the world have debt ceiling laws, and Washington’s periodic lifting of the borrowing limit merely allows it to pay for spending Congress has already authorized.
Biden would agree to a separate discussion on the budget but not tied to the debt ceiling, the White House said.
The start of active talks could soothe the nerves of investors who last week forced the federal government to pay its highest interest ever for a one-month debt issue.
Prices for short-term Treasury bills fell on Tuesday as investors sold off debt that could come due around the time the U.S. debt limit could be hit.
Biden’s foreign travel plans and House and Senate recesses mean there are just seven days when all three parties are scheduled to be in town before June 1.
On Tuesday, Biden added a stop in Papua, New Guinea, on May 22 to his itinerary that includes Japan and Australia, but the addition was not expected to lengthen his May 19-24 trip to Asia.
Treasury Secretary Janet Yellen on Monday said a failure to raise the debt limit would hurt the U.S. economy and weaken the dollar as the world’s reserve currency. Treasury cash is dwindling as the extraordinary measures it is taking are exhausted.
White House officials have discussed whether Biden has the authority to lift the debt limit on his own by invoking the U.S. Constitution’s 14th amendment, but Biden told MSNBC last week that “I’ve not gotten there yet” on this argument.
The 14th amendment says the validity of the public debt of the United States “shall not be questioned.” Invoking it could trigger a legal challenge.
(Reporting By Steve Holland; Additional reporting by Trevor Hunnicutt and David Morgan; Writing by Trevor Hunnicutt; Editing by Heather Timmons, Alistair Bell, Leslie Adler and Jonathan Oatis)
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WASHINGTON (Reuters) – U.S. President Joe Biden and top Republican lawmakers will declare their positions face to face on Tuesday on raising the $31.4 trillion U.S. debt ceiling, with an unprecedented default looming in three weeks if Congress does not act.
Ahead of the 4 p.m. Eastern time (2000 GMT) Oval Office session, there were no signs that either side would immediately agree to any concessions that would head off a default as early as June 1.
Economists warn that a lengthy default could send the U.S. economy into a deep recession with soaring unemployment while destabilizing the global financial system that’s built on U.S. bonds. Investors are bracing for impact.
Graphic: World markets hunker down as US debt ceiling looms – https://www.reuters.com/graphics/USA-DEBT/xmpjkyowovr/graphic.jpg
The Democratic president is calling on lawmakers to raise the federal government’s self-imposed borrowing limit without conditions. Republican House of Representatives Speaker Kevin McCarthy has said that his chamber will not approve any deal that does not cut spending to address a growing budget deficit.
Past debt ceiling fights have typically ended with a hastily arranged agreement in the final hours of negotiations, thus avoiding a default. In 2011, the scramble prompted a downgrade of the country’s top-notch credit rating. Veterans of that battle warn that the current situation is even riskier because political divides have widened.
Tuesday’s meeting was likely to be the start of an increasingly fraught period, marked by uncertainty.
White House press secretary Karine Jean-Pierre told reporters on Monday that Biden plans to say at the meeting: “It’s Congress’ constitutional duty to act, to prevent default. The president is going to be very clear about that.”
McCarthy, whose party holds the House by only a slim majority, wants to tie a vote on the debt ceiling to broad spending cuts the White House considers draconian.
“Pull back on some of the spending that you seem hell-bent to do and then we can negotiate,” Republican Senator Bill Cassidy of Louisiana told CNN on Monday.
The U.S. Chamber of Commerce, the nation’s largest business association, on Tuesday urged a “swift” bipartisan agreement on the debt limit that would also include permitting reform and an agreement on discretionary spending caps.
Biden would agree to a separate discussion on the budget but not tied to the debt ceiling, the White House said.
His meeting with McCarthy will be their first since Feb. 1. They will be joined by Senate Majority Leader Chuck Schumer, a Democrat, and top Senate Republican Mitch McConnell. Top House Democrat Hakeem Jeffries will also join the talks.
The start of active talks could soothe the nerves of investors who last week forced the federal government to pay its highest interest ever for a one-month debt issue.
White House staff and aides to the congressional leaders quietly met on Friday to begin talking about the debt limit. Louisa Terrell, the head of the White House Legislative Affairs Office, was present as were representatives from the Office of Management and Budget and the National Economic Council.
Biden’s foreign travel plans and House and Senate recesses mean there are just seven days when all three parties are scheduled to be in town before June 1.
On Tuesday, Biden added a stop in Papua New Guinea on May 22 to his itinerary that includes Japan and Australia, but the addition was not expected to extend the length of his trip to Asia.
Treasury Secretary Janet Yellen on Monday said a failure to raise the debt limit would cause a huge hit to the U.S. economy and weaken the dollar as the world’s reserve currency.
Few countries in the world have debt ceiling laws and Washington’s periodic lifting of the borrowing limit merely allows it to pay for spending Congress has already authorized.
White House officials have discussed whether Biden has the authority to lift the debt limit on his own by invoking the U.S. Constitution’s 14th amendment, but Biden told MSNBC last week that “I’ve not gotten there yet” on this argument.
The 14th amendment says the validity of the public debt of the United States “shall not be questioned.” Invoking it would trigger a legal challenge.
(Reporting By Steve Holland; Additional reporting by Trevor Hunnicutt; Editing by Heather Timmons and Alistair Bell)
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