UPDATED 2:20 P.M.
WASHINGTON (Reuters) -Democratic President Joe Biden and top congressional Republican Kevin McCarthy held a new round of talks about the U.S. debt ceiling on Tuesday, and sources said work requirements for benefits programs for low-income Americans were on the table.
Biden sat down in the Oval Office with House of Representatives Speaker McCarthy, Senate Majority Leader Chuck Schumer, House Democratic leader Hakeem Jeffries and Senate Republican leader Mitch McConnell.
“We’re just getting started,” Biden told reporters just after 3 p.m. EDT (2000 GMT), before ushering them out the door so the meeting could begin.
Biden is trying to reach a debt ceiling deal by June 1 to lift the threat of economic calamity. The White House announced Biden may be forced to skip a stop in Australia during an Asia trip due to the debt limit drama.
Ahead of the Oval Office meeting, Biden and McCarthy’s aides have discussed the requirements for two key programs that provide food and cash aid to families, in the past week’s negotiations over raising the government’s $31.4 trillion debt ceiling to avoid an economically catastrophic default.
Expanding the work requirements has been a key demand of Republicans, who are also pushing for spending cuts in exchange for their votes to raise the debt limit.
Biden and McCarthy have little time to strike a deal. On Monday, the Treasury Department reiterated its warning that it could run short of money to pay all its bills as soon as June 1, triggering a default that economists say would be likely to spark a sharp economic downturn.
McCarthy on Tuesday told reporters that his party, which controls the chamber by a 222-213 margin, would only agree to a deal that cuts spending.
“We can raise the debt ceiling if we limit what we’re going to spend in the future,” McCarthy told reporters.
Both parties agree on the need for urgent action.
In the past week, staffs for both sides have discussed a range of issues, including spending caps, new work requirements for some benefit programs for low-income Americans and changes to energy permitting in exchange for votes to lift the limit, according to people briefed on the talks.
The sources, who spoke on condition of anonymity to reveal details about closed-door negotiations, said the work requirement discussions focus on the Supplemental Nutrition Assistance Program (SNAP), previously known as food stamps, and the Temporary Assistance for Needy Families program.
Biden alluded to the talks in public remarks over the weekend, saying he would not consider such a move for the Medicaid health program for low-income Americans.
“The president has been clear that he will not accept proposals that take away peoples’ health coverage,” said White House spokesperson Michael Kikukawa. “The president has also been clear that he will not accept policies that push Americans into poverty. He will evaluate whatever proposals Republicans bring to the table based on those principles.”
PREVIOUS DOWNGRADE
A similar 2011 standoff over the debt limit led to a historic downgrade of the U.S. credit rating, sparking a sell-off in stocks and pushing the government’s borrowing costs higher.
The current deadlock has rattled investors, sending the cost of insuring exposure to U.S. government debt to record highs. A Reuters/Ipsos poll completed on Monday found that three-fourths of Americans fear a default would take a heavy toll on families like theirs.
“Nobody should use default as a hostage,” Schumer said in a Senate speech on Tuesday. “The consequences would be devastating for America.”
Some observers have raised concerns that the five-party talks are too unwieldy to make progress.
No. 2 Senate Republican John Thune told reporters the talks appear to have “too many cooks.”
“As we’ve said all along, it is Biden and McCarthy,” Thune said. “So, whoever can actually speak on behalf of the president needs to get in the room, and get McCarthy’s best people in there, and get it done.”
McCarthy himself said he would prefer one-on-one talks with Biden.
“If the president comes to an agreement, the Democrats in the Senate will vote for it. The House will pass it, if we are all in agreement,” McCarthy said. “Why do we waste more time going around and around, not solving any of the real problems? I think you’re putting the country in jeopardy when you do that.”
(Reporting by David Morgan and Jarrett Renshaw, additional reporting by Jeff Mason, Richard Cowan and Moira Warburton; Editing by Scott Malone, Andrew Heavens and Jonathan Oatis)
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WASHINGTON (Reuters) – Democratic President Joe Biden and top congressional Republican Kevin McCarthy will sit down on Tuesday to try to make progress on a deal to raise the U.S. government’s $31.4 trillion debt ceiling and avert an economically catastrophic default.
They have little time to reach a deal. The U.S. Treasury Department on Monday reiterated its warning that it could run short of money to pay all its bills as soon as June 1, which would trigger a default that economists say would be likely to spark a sharp economic downturn.
Republicans, who control the House of Representatives by a 222-213 majority, have for months demanded that any increase in the government’s self-imposed borrowing cap be linked to spending cuts. In the past week, staffs for both sides have discussed a range of issues, including spending caps and changes to energy permitting in exchange for votes to lift the limit, according to people briefed on the talks.
White House officials have described the talks as constructive, but McCarthy on Monday warned that he believed little progress had been made.
“If you look at the timeline to pass something in the House and pass something in the Senate, you’ve got to have something done by this weekend,” McCarthy told reporters. “And we are nowhere near any of that.”
Biden is due to leave town on Wednesday to attend a meeting of the Group of Seven rich nations in Japan, while the House is currently scheduled to leave Washington for a week-long recess after Thursday’s session.
Democrats including Senate Majority Leader Chuck Schumer, who is also expected to attend Tuesday’s White House meeting, said that talks were proceeding in a “serious way.”
He criticized Republicans for blocking a debt ceiling hike after helping to raise it three times under Biden’s Republican predecessor, Donald Trump.
“Default must be taken off the table,” Schumer said in a Monday speech on the Senate floor. “No one should play with it. No one should flirt with it. No one should hold it hostage and say unless you do this, we’re going to default, because the consequences of default are just awful.”
A similar 2011 standoff led to a historic downgrade of the United States’ credit rating, which sparked a selloff in stocks and pushed its borrowing costs higher.
The current standoff has rattled investors, sending the cost of insuring exposure to U.S. government debt to record highs, and a Reuters/Ipsos poll completed on Monday found that three-quarters of Americans fear that a default would take a heavy toll on families like theirs.
‘TOO MANY COOKS’
Some observers have raised concerns that the five-party talks — featuring Biden, McCarthy, Schumer, top Senate Republican Mitch McConnell and top House Democrat Hakeem Jeffries — are too unwieldy to make progress.
No. 2 Senate Republican John Thune told reporters that the talks appear to have “too many cooks.”
“As we’ve said all along, it is Biden and McCarthy,” Thune said. “So, whoever can actually speak on behalf of the president needs to get in the room, and get McCarthy’s best people in there, and get it done.”
Adding to the challenge of striking a deal, McCarthy agreed to a change in House rules that allows for just one member to call for his ouster as speaker, which gives greater power to hardliners, including the roughly three dozen members of the House Freedom Caucus.
(Reporting by David Morgan and Jarrett Renshaw, additional reporting by Jeff Mason, Richard Cowan and Moira Warburton; Editing by Scott Malone and Rosalba O’Brien)
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