Biden and McCarthy Discuss Debt Limit as Financial Crisis Looms


WASHINGTON — President Biden told Speaker Kevin McCarthy on Wednesday that there was room for discussion about addressing America’s deficit, even as he insisted that Congress would have to pass a debt-limit increase with no strings attached to avoid a financial cataclysm.

Mr. Biden and Mr. McCarthy met at the White House for more than an hour in a discussion that carried high stakes, with the federal government set to exhaust its ability to pay its bills on time as early as June.

Republicans have refused to raise the statutory debt limit unless Mr. Biden accepts deep cuts in federal spending. The president has said repeatedly that he expects Congress to raise the borrowing cap with no conditions — and that he will not negotiate conditions for an increase.

After the meeting, the White House said Mr. Biden repeated to Mr. McCarthy that he would not negotiate on the limit. But the president did say he welcomes a “separate discussion with congressional leaders about how to reduce the deficit and control the national debt while continuing to grow the economy,” according to a White House summary of the meeting.

The statement signaled that Mr. Biden was open to a parallel discussion on tax and spending issues with Mr. McCarthy, even as he stood firm that Congress would have to pass a clean debt-ceiling increase to avert a crisis that could tip the country into recession.

Mr. McCarthy emerged from the meeting without tangible signs of progress, but he expressed some glimmers of optimism.

“No agreements, no promises,” he said. “Except we will continue this conversation.”

The federal government has run a budget deficit every year since 2000, forcing it to borrow money and add to a national debt that now sits at $31.4 trillion.

The meeting teed up what could be a long and potentially unwieldy stretch of negotiations for Mr. McCarthy, who is grappling with a razor-thin majority and a conference of lawmakers who have chafed at raising the debt ceiling and resisted federal spending at nearly all levels.

Mr. Biden, too, is feeling pressure.

Six Democrats, led by Representative Jared Golden of Maine, on Wednesday sent both Mr. Biden and Mr. McCarthy a letter urging both men to engage in “good faith negotiations that avoid the partisan standoffs of the past.”

And Representative Mike Lawler, Republican of New York, warned in an interview that attempts by Mr. Biden to shun Mr. McCarthy in favor of brokering a compromise with the party’s centrists would be futile.

“The White House needs to acknowledge the fact that there is no longer one-party rule,” Mr. Lawler, one of 18 Republicans who represent districts won by Mr. Biden, said. “They need to negotiate in good faith, and they can’t circumvent the speaker by just going to myself and my colleagues in these Biden districts.”

Warnings are mounting of economic costs if Congress does not raise the limit.

On Wednesday, the chairman of the Federal Reserve, Jerome H. Powell, warned in a news conference that the nation’s central bank could not prevent economic catastrophe if lawmakers do not agree to raise the limit.

“There is only one way forward here, and that is for Congress to raise the debt ceiling, so that the United States government can pay all of its obligations,” Mr. Powell said.

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“Any deviations from that path would be highly risky” for the economy, he added.

The afternoon meeting took place behind closed doors, but the hours leading up to it highlighted the differences between the White House and the Republicans who now control the House.

Mr. Biden and Mr. McCarthy had blamed each other on Tuesday for the impasse in raising the debt ceiling. The president called the speaker a “decent man” who had caved to extremists in his party to take power.

He made “commitments that are just absolutely off the wall for a speaker of the House to make,” Mr. Biden told reporters on Tuesday.

The Treasury Department is employing a range of “extraordinary measures” to ensure that the United States can continue paying its bills, including interest payments to creditors. But at some point, the country will need to borrow more money to finance its obligations. The nation runs a budget deficit, which means it spends more than it earns, and it borrows huge sums of money to pay everything from military salaries to Social Security benefits.

Economists have widely warned of economic crisis if lawmakers do not raise the limit before the government loses the ability to pay all its bills at once, which could happen as soon as June. If the United States cannot borrow more money, it would not be able to make good on a range of financial obligations, including paying bondholders, plunging the nation into default.

Republicans are seeking to use the threat of those consequences to force Mr. Biden into a debate over taxes, spending, debt and the size of the federal government.

Both sides have sought to frame the discussion in favorable terms. Republicans have assailed Democrats for runaway spending, pointing to the stimulus package that Mr. Biden signed into law. They blame that spending for fueling rapid inflation last year, though price increases have since eased. Republican lawmakers say current federal debt levels are unsustainable and risk undercutting economic growth.

Mr. Biden has said frequently that he is willing to reduce deficits by raising taxes on high earners and corporations — moves Republicans oppose. The president and his aides have tried to push Republicans into detailing specific parts of the federal budget they want to cut, betting on a voter backlash to any proposals that touch popular programs like government health care, education and retirement spending.

Underscoring the potentially long and winding process lawmakers have ahead of them, Mr. McCarthy gathered his conference on Wednesday morning ahead of the meeting at the White House for an educational presentation on the debt limit, designed largely, he said, for lawmakers who had “never been in the majority” before.

Representative Don Bacon of Nebraska, who attended the meeting with Mr. McCarthy on Wednesday, said the speaker did not lay out specific areas where Republicans might seek to cut spending but reiterated that he wanted to negotiate “in good faith” with Mr. Biden.

“We know that we’ve got to get a deal,” said Mr. Bacon, one of the most outspoken centrists in the conference, describing the tenor of the meeting. “Negotiate the best deal we can, and then we’re going to need to support it.”

Those kinds of informational briefings and discussions — called “listening sessions” by Mr. McCarthy — were a key part of his strategy in 2011, when he needed to persuade unyielding conservative lawmakers swept into power by the Tea Party movement to vote to raise the debt ceiling.

In his Capitol office, Mr. McCarthy, then the majority whip, gently nudged holdouts into naming concessions from the Obama administration that would be substantial enough to pave the way for them to vote for a debt limit deal.

The Republicans’ meeting on Wednesday also served as an effort by Mr. McCarthy to pull his restive conference in closer before the White House negotiations. The move may insulate Mr. McCarthy from the distrust that plagued Speaker John A. Boehner, Republican of Ohio, during the 2011 debt ceiling crisis.

When Mr. Boehner negotiated with President Barack Obama, the discussions stoked concerns among hard-right lawmakers skeptical of the establishment-styled speaker that the two men would privately shake hands on a deal that betrayed conservative values. Mr. McCarthy is trying the opposite approach.

Karoun Demirjian contributed reporting.


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