Debt-limit talks hit standstill over ‘real differences’

WASHINGTON — Debt limit talks came to an abrupt standstill Friday after Republican House Speaker Kevin McCarthy said it’s time to “pause” negotiations, and a White House official acknowledged there are “real differences” that are making talks difficult.

McCarthy said resolution to the standoff is “easy,” if only President Joe Biden would agree to some spending cuts Republicans are demanding. It is unclear when negotiations would resume.

“We’ve got to get movement by the White House and we don’t have any movement yet,” McCarthy, R-Calif., told reporters at the Capitol. “So, yeah, we’ve got to pause.”

A White House official who was granted anonymity Friday to discuss the private conversations said there are “real differences” between the parties on the budget issues and further “talks will be difficult.”

The official added that the president’s team is working hard toward a “reasonable bipartisan solution” that can pass both the House and the Senate.

Biden’s administration is racing to strike a deal with Republicans led by McCarthy as the nation careens toward a potentially catastrophic debt default if the government fails to increase the borrowing limit, now at $31 trillion, to keep paying the nation’s bills.

Wall Street turned lower as the negotiations on raising the nation’s debt limit came to a sudden halt, raising worries that the country could edge closer to risking a highly damaging default on U.S. government debt.

The president, who has been in Japan attending the Group of Seven summit, had no immediate comment. Biden had already planned to cut short the rest of his trip and is expected to return to Washington later Sunday.

Negotiators met for a third day behind closed doors at the Capitol with hopes of settling on an agreement this weekend before possible House votes next week. They face a looming deadline as soon as June 1 when the Treasury Department has said it will run out of cash to pay the government’s incurred debt.

Republicans want to extract steep spending cuts that Biden has so far refused to accept. Any deal would need the support of both Republicans and Democrats to find approval in a divided Congress and be passed into law.

“Look, we can’t be spending more money next year,” McCarthy said at the Capitol. “We have to spend less than we spent the year before. It’s pretty easy.”

But McCarthy is facing a hard-right flank of Freedom Caucus and other Republican lawmakers almost certain to oppose any deal with the White House.

Markets had been rising this week on hopes of a deal. But that shifted abruptly Friday after negotiators ended late morning an hour after they had begun.

Rep. Garret Graves, R-La., tapped by McCarthy to lead the talks, emerged from an hourlong session at the Capitol and said gaps remained between House Republicans and the Democratic administration.

“It’s time to press pause because it’s just not productive,” Graves told reporters.

He added that the negotiations have become “just unreasonable” and that it was unclear when talks would resume.