Biden and McCarthy discuss debt crisis as GOP negotiator says ‘thorny issues’ remain

WASHINGTON —  President Biden and House Speaker Kevin McCarthy spoke directly Saturday evening as they raced to strike an agreement to resolve the looming debt crisis ahead of a June 5 deadline and avert a catastrophic U.S. default.

Biden also discussed the status of the talks earlier in the day with Democratic congressional leaders, according to three people familiar with the situation, who spoke on condition of anonymity because they were not authorized to speak about the matter publicly.

But the two sides have not reached a deal yet.

“Big, thorny issues remain,” Rep. Patrick McHenry (R-N.C.), one of the top negotiators, told reporters Saturday evening.

Some of those outstanding issues, he said, “the president and speaker have to resolve at that level.”

The Republican House speaker gathered top allies behind closed doors at the Capitol as negotiators pushed for a deal that would raise the nation’s borrowing limit and avoid a first-ever default on the federal debt, while also making enough spending cuts to satisfy demands by House Republicans.

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As McCarthy (R-Bakersfield) arrived at the Capitol early in the day, he said that Republican negotiators were “closer to an agreement.”

His comments echoed the latest public assessment from Biden, who said Friday evening that the parties were “very close” to a deal. Biden and McCarthy last met face to face on the matter Monday.

Their discussion by phone Saturday came after Treasury Secretary Janet L. Yellen told Congress that the United States could default on its debt obligations by June 5 — four days later than previously estimated — if lawmakers do not act in time to raise the federal debt ceiling. The new “X-date” gives the two sides a bit more time as they scramble for a deal.

But as another day dragged on with Americans and the world uneasily watching and waiting for an outcome, it appeared some of the policy issues that have dogged talks all week remained unresolved.

Both sides have indicated that one of the main holdups is a GOP effort to expand existing work requirements for recipients of food stamps and other federal aid programs, a longtime Republican goal that Democrats have strenuously opposed. The White House said the Republican proposals were “cruel and senseless.”

The parties also appear to still be laboring over a compromise on federal permitting changes that would ease regulations for developing oil, gas and renewable energy projects and foster new transmission line connections.

McCarthy, who dashed out before the lunch hour and arrived back at the Capitol with a big box of takeout, declined to elaborate on those discussions. One of his negotiators, Louisiana’s Rep. Garret Graves, has said there is “not a chance” that Republicans might relent on the work requirements.

The negotiating brinkmanship threatens to throw the U.S. economy into chaos and sap world confidence in the nation’s leadership. House negotiators left the Capitol at 2 a.m. Saturday, only to return hours later.

Failure to lift the borrowing limit, now $31 trillion, to pay the nation’s incurred bills, would send shock waves through the U.S. and global economy.

Yellen said failure to act by the new date would “cause severe hardship to American families, harm our global leadership position and raise questions about our ability to defend our national security interests.”

Anxious retirees and others are already making contingency plans. The next Social Security payments are due to go out next week.

Biden, who is spending part of the weekend at the presidential retreat at Camp David, Md., continued to talk with his negotiating team multiple times a day, signing off on offers and counteroffers. He was upbeat as he left the White House on Friday evening, saying: “It’s very close, and I’m optimistic.”

All sides also are hearing from other lawmakers, including Sen. Kyrsten Sinema, the independent from Arizona, who has been in the center of big policy debates, and Rep. Josh Gottheimer (D-N.J.) of the bipartisan Problem Solvers Caucus.

Biden and McCarthy have seemed to be narrowing on a two-year budget-cutting deal that would also extend the debt limit into 2025 past the next presidential election. The contours of the deal have been taking shape to cut spending for 2024 and impose a 1% cap on spending growth for 2025.

Rep. Tom Emmer of Minnesota, the Republican whip who is in charge of counting the votes from McCarthy’s slim majority to ensure passage of any deal, said he was telling rank-and-file lawmakers not to believe what they’re hearing until party leaders deliver the news about any deal.

Any deal would need to be a political compromise in a divided Congress. Many of the hard-right Trump-aligned Republicans in Congress have long been skeptical of the Treasury Department’s projections, and they are pressing McCarthy to hold out.

“We’re constantly in touch with our members, letting them know that what is being reported, you should not accept that,” Emmer said. “If there’s an agreement, we will let them know.”

The Republican proposal on work requirements would save $11 billion over 10 years by raising the maximum age for existing standards that require able-bodied adults who do not live with dependents to work or attend training programs.

Current law applies those standards to recipients under the age of 50. The GOP plan would raise the age to include adults 55 and under. It would lower the number of exemptions that states can grant to some recipients subject to those requirements.

Biden has said the work requirements for Medicaid would be a nonstarter. He initially seemed potentially open to negotiating minor changes on food stamps, now known as the Supplemental Nutrition Assistance Program, or SNAP, but his position has appeared to harden.

Lawmakers were not expected to return to work from the Memorial Day weekend before Tuesday, at the earliest, and McCarthy has promised them he will abide by the rule to post any bill for 72 hours before voting.

The Democratic-held Senate has largely stayed out of the negotiations, leaving the talks to Biden and McCarthy. Senate Majority Leader Charles E. Schumer (D-N.Y.) has pledged to move quickly to send a compromise package to Biden’s desk.

The Biden administration resisted for months on negotiating spending cuts with McCarthy, saying that the country’s full faith and credit should not be used as leverage to extract partisan priorities. But House Republicans united behind a plan to cut spending, narrowly passing legislation in late April that would raise the debt ceiling in exchange for the spending reductions.

Raising the debt limit in order to pay bills the nation has already incurred was once routine in Congress, but Republicans have used it as a bargaining chip in recent years.