No agreement to avoid default, but meetings continue

WASHINGTON — President Biden and House Speaker Kevin McCarthy declared they had a productive debt ceiling discussion late Monday at the White House, but there was no agreement and neither side appeared to be giving ground as Washington strained to raise the nation’s borrowing limit in time to avert a potentially chaotic federal default.

It’s a crucial moment for the Democratic president and the Republican speaker, just 10 days before a looming deadline to raise the debt limit.

As soon as June 1, Treasury Secretary Janet L. Yellen said in a letter to Congress, “it is highly likely” the government will be unable to pay all the nation’s bills. Such an unprecedented default would be financially damaging for many Americans and others around the world relying on U.S. stability, sending shock waves through the global economy.

Each side praised the other’s seriousness, but basic differences remained. A prime example is how to trim annual budget deficits. Biden wants to increase some taxes on the wealthiest Americans and some big companies, but McCarthy will have none of that.

The speaker said Republicans are determined to cut spending while Biden wants to increase it.

“That has got to stop, and it’s got to end now,” McCarthy after the Oval Office meeting.

In a brief post-meeting statement, Biden called the session productive but merely added that he, McCarthy and their lead negotiators “will continue to discuss the path forward.” McCarthy said their teams would work “through the night.”

Biden said all agreed that “default is not really on the table.”

Though there is no agreement on basic issues, the contours of a deal seem within reach. Negotiations have narrowed on a 2024 budget year cap that would be key to resolving the standoff. Republicans have insisted next year’s spending cannot be more than 2022 levels, but the White House instead offered to hold spending f lat at current numbers.

A budget deal would unlock a separate vote to lift the debt ceiling, now $31 trillion, to allow more borrowing.

Time is growing short. The House speaker promised lawmakers he will abide by the rule to post any bill for 72 hours before voting, making any action doubtful until the end of the week — just days before the potential deadline. The Senate would also have to pass the package before it could go to Biden’s desk to be signed into law.

After a weekend of startstop talks, both Biden and McCarthy have declared a need to close out a compromise deal. U.S. financial markets turned down last week after negotiations paused amid a jittery economy.

Biden and McCarthy spoke by phone Sunday while the president was returning home on Air Force One after the Group of 7 summit in Japan.

Biden used his concluding news conference in Hiroshima, Japan, to say he had done his part by agreeing to spending cuts and to warn, “It’s time for Republicans to accept that there is no deal to be made solely, solely, on their partisan terms.”

“Now it’s time for the other side to move from their extreme position,” he said.

The call between the two revived talks, and negotiators met for 21⁄2 hours at the Capitol late Sunday evening, saying little as they left.

“We’ll keep working,” said Steve Ricchetti, counselor to the president, as the White House team exited talks late Sunday.

Negotiators for the White House were back at it again for nearly three hours Monday morning with McCarthy’s team at the Capitol ahead of the session at the White House.

But McCarthy continued to blame Biden for having refused to engage earlier on annual federal spending, a separate issue but linked to the nation’s debt.

GOP lawmakers have been holding tight to demands for sharper spending cuts with caps on future spending, rejecting the alternatives proposed by the White House that call for reducing deficits in part with new revenue from taxes.

McCarthy has insisted personally in his conversations with Biden that tax hikes are off the table.

Republicans want to roll back next year’s spending to 2022 levels, but the White House has proposed keeping 2024 the same as it is now, in the 2023 budget year.