Debt limit talks seem to make little headway

Debt limit talks between the White House and House Republicans stopped, started and stopped again heading into a weekend where President Joe Biden and world leaders watched from afar, hoping high-stakes negotiations would make progress on avoiding a potentially catastrophic federal default.

In a sign of a renewed bargaining session, food was brought to the negotiating room at the Capitol on Saturday morning, only to be carted away hours later. No meeting was likely Saturday, according to a person familiar with the state of the talks who was not authorized to publicly discuss the situation and spoke on condition of anonymity.

Biden’s administration is reaching for a deal with Republicans led by House Speaker Kevin Mccarthy, R-calif. The sides are up against a deadline as soon as June 1 to raise its borrowing limit, now at $31 trillion, so the government can keep paying the nation’s bills. Republicans are demanding steep spending cuts the Democrats oppose.

Negotiations had came to an abrupt standstill Friday morning when Mccarthy said it was time to “pause” talks. Then the teams convened again in the evening, only to quickly call it quits for the night.

Biden, attending a meeting of global leaders in Japan, tried to reassure them on Saturday that the United States would not default, a scenario that would rattle the world economy. He said he felt there was headway in the talks.

“The first meetings weren’t all that progressive, the second ones were, the third one was,” he said. The president said he believes “we’ll be able to avoid a default and we’ll get something decent done.”

Negotiators for Mccarthy said after the Friday evening session that they were uncertain on next steps.

“We reengaged, had a very, very candid discussion, talking about where we are, talking about where things need to be, what’s reasonably acceptable,” said Rep. Garret Graves, R-LA.

Rep. Patrick Mchenry, R-N.C. was asked if he was confident an agreement over budget issues could be reached with the White House. He replied, “No.”

As the White House team left the nighttime session, Biden counselor Steve Ricchetti, who is leading talks for the Democrats, said he was hopeful. “We’re going to keep working,” he said.

Mccarthy had said resolution to the standoff is “easy,” if only Biden’s team would agree to some spending cuts Republicans are demanding. The biggest impasse was over the fiscal 2024 top-line budget amount, according to a person briefed on the talks and granted anonymity to discuss them. Democrats contend the steep reductions Republicans have put on the table would be potentially harmful to Americans, and they are insisting that Republicans agree to tax increases on the wealthy, in addition to spending cuts, to close the deficit.

Wall Street turned lower Friday as negotiations came to a sudden halt. Experts have warned that even the threat of a debt default would could spark a recession.

Republicans argue the nation’s deficit spending needs to get under control, aiming to roll back spending to fiscal 2022 levels and restrict future growth. But Biden’s team is countering that the caps Republicans proposed in their Housepassed bill would amount to 30% reductions in some programs if Defense and veterans are spared, according to a memo from the Office of Management and Budget.

Any deal would need the support of both Republicans and Democrats to find approval in a divided Congress and be passed into law. Negotiators are eyeing a more narrow budget cap deal of a few years, rather than the decadelong caps Republicans initially wanted, and clawing back some $30 billion of unspent COVID-19 funds.