The White House has insisted it will not negotiate on the debt ceiling, warning that a prolonged standstill could trigger a financial crisis and push the United States to the brink of default.
But Republicans see the debt limit as an opportunity to extract concessions from an administration dealing with a divided Congress for the first time under Biden. While those positions did not appear to change in their closed-door meeting, McCarthy expressed renewed optimism that the two would ultimately be unable to reach an agreement.
“I want to see if we can reach an agreement long before the deadline,” he said. “We have different opinions. But we’ve both expressed some ideas about where we want to go, and I believe that after putting the two together, I can see that we can find common ground.
McCarthy declined to elaborate on what specific proposals he discussed with Biden, other than to say he believed the two could eventually reach a two-year financial deal.
But he reiterated that the GOP is determined to contain government spending as part of a deal to raise the debt ceiling. It’s unclear which programs McCarthy is proposing to defund, and the White House has shown little willingness to enter into formal negotiations until he does so.
Biden officials at the start of the meeting focused specifically on the potential for a deal to avert a debt ceiling crisis, while separately offering small concessions to McCarthy to allow him to save face with his party — such as creating a commission to investigate. and recommending. future spending reforms.
But the White House isn’t ready to touch on entitlement spending or the kidney programs that are key to Biden’s agenda. And while McCarthy downplayed initial talk of cutting Medicare and Social Security, he acknowledged that the two sides remain far apart and appeared to reject the commission’s idea.
“I don’t need a commission to tell me where there is waste, fraud and abuse,” McCarthy said. “We don’t need a commission telling us to do the job that the American public elected us to do.”
That means any deal the White House might consider supporting at this early stage is unlikely to appeal to the GOP.
“Every indication is that the right wing of the House Republican caucus is not going to go through without radical budget cuts and cuts to some of the programs that Biden led,” a Biden economic adviser said. “McCarthy has yet to show that he can convince the maximalists in his party to settle for anything other than a maximalist position.”
The tie-up of the debates, the White House believes, lays some groundwork for what kind of bill McCarthy might actually get through the House. The GOP has yet to solidify itself behind a set of demands, and the White House is reluctant to give McCarthy a preemptive boost as he tries to navigate his fractured caucus.
Biden officials gleefully seized on signs of discord among House Republicans. GOP lawmakers highlight their displeasure in the absence of a concrete plan by the party.
The White House plans to release its budget proposal on March 9, which officials hope will provide a clear contrast to Republican demands and intensify the public debate on lifting the debt ceiling.
“We cannot negotiate with ourselves,” said Rep. Richard Hudson (RN.C.), a member of the GOP leadership, though other Republicans pressed for clarity on the conference strategy. “The president should negotiate with us.”
The White House saw this initial meeting as the first of many months to come; an opportunity for both sides to grow each other and create a starting point for negotiations that can extend into the spring and summer.
Although Biden and McCarthy spoke occasionally during the Obama era, the two men are not close. The initial session, some aides suggested, is part of Biden’s effort to build a relationship with the House speaker that he will need to work on a series of priorities over the next two years.
“What you’re not going to see is either side changing their position,” the Biden adviser said. “It’s a meeting where people sort things out and understand where everyone is.”
Senior White House officials sought to strengthen their position ahead of schedule, writing in a memo Tuesday that Biden would press McCarthy to avoid a debt default and release a budget that shows where the GOP wants to keep funding.
“Any serious conversation about economic and fiscal policy must begin with a clear understanding of the goals and proposals of stakeholders,” wrote senior economic adviser Brian Deese and Office of Management and Budget Director Shalanda Young.
The White House plans to release its budget proposal on March 9, which officials hope will provide a clear contrast to Republican demands and intensify the public debate on lifting the debt ceiling.
The government hit its debt ceiling in January, and estimates it can only pay its bills in June without an increase. The US has never gone bankrupt on purpose, and Congress has voted regularly in recent years to raise its debt limit under the Trump and Biden administrations. Taking that path, Democrats have insisted on passing a clean increase again, arguing that the need to avoid economic disaster is too great to compromise on the debt ceiling.
The last time the U.S. came close to default in 2011, the shutdown roiled global financial markets and led to a downgrade of the country’s credit rating. If the government breaks the debt ceiling this time, economists predict it will trigger an immediate recession and send the stock market into a tailspin.
Still, House Republicans enjoyed a battle over the debt ceiling, fueled by a conservative faction that blocked McCarthy’s path to the speakership until he made a series of promises that included using the debt ceiling to push cost reduction.
The stance has angered Democrats, who question McCarthy’s ability to negotiate on behalf of a GOP majority that includes lawmakers who have already indicated they will not agree to raise the debt ceiling. .
“I have a very strong suspicion that when the American people see what the Republican MAGA circle is here, and what their hostage demands are, there will be a sudden collapse. [in support],” said Sen. Sheldon Whitehouse (D-R.I.), who chairs the House budget committee.
Sarah Ferris contributed to this report.
