President Joe Biden and House Speaker Kevin McCarthy will meet on Monday to directly negotiate on how to raise the federal government's debt ceiling in the final days before the country defaults on its bills.
McCarthy, R-Calif., told reporters on Sunday that a conversation he'd just had with Biden as the president flew back from an international summit in Hiroshima, Japan, was "productive" and that "I think we can solve some of these problems if he understands what we're looking at."
"But look, there's no agreement. We're still apart," he said.
He declined to provide specifics on how long the debt limit would be raised under a deal and said negotiations are ongoing about the length of any budget caps.
Those comments mark a tone shift after an earlier war of words between McCarthy and Biden on Sunday — the latest twist in the roller coaster negotiations to raise the current $31.4 trillion debt limit before the country runs out of funds to pay all of its existing obligations, which will happen as soon as June 1, according to Treasury Secretary Janet Yellen.
Such a default would be unprecedented and almost certainly roil the U.S. and international markets, risking major financial damage.
In exchange for hiking the nation's borrowing limit, House Republicans are seeking spending cuts and policy changes, particularly around aid programs and government permits.
Biden has signaled some openness while also calling for tax increases.
Office of Management and Budget Director Shalanda Young and White House adviser Steve Richetti are expected to come to Capitol Hill later Sunday to meet with Republican Reps. Garret Graves and Patrick McHenry to ensure Biden and McCarthy are prepared in advance of Monday's meeting.
Last week, the White House and Republicans spoke optimistically about reaching a debt and budget deal. But both the president and speaker earlier Sunday publicly rebuked the other for placing partisanship over the economy.
Talking with reporters in Hiroshima, Japan, before he spoke with McCarthy, Biden emphasized that the only deal to be made was through bipartisan negotiations.
Biden hammered Republicans over what he called their "extreme positions" on raising the debt ceiling, which was reached in January.
MORE: Key sticking points, possible areas of compromise in the debt ceiling showdown
"It's time for the other side to move from their extreme positions because much of what they've proposed is quite frankly unacceptable," Biden said. "It's time for Republicans to accept that there is no bipartisan deal to be made solely on their partisan terms. They have to move as well."
"I'm not going to agree to a deal that protects, for example, a $30 billion tax break for the oil industry, which made $200 billion last year. They don't need an incentive of another $30 billion, while putting health care of 21 million Americans at risk by going after Medicaid," he said.
The president said that it has been "hard to determine where they [Republicans] are, quite frankly" but that working with McCarthy directly could be fruitful.
Biden initially resisted negotiating on raising the debt limit — saying lawmakers must hike it without preconditions — but has since agreed to budget talks alongside a debt increase.
McCarthy said earlier this weekend that the debt talks would be paused until after Biden returned from overseas, contending that "the White House moved backwards" during bargaining.
"My guess is he's going to want to deal directly with me," Biden said in Japan. "We're going to have to sit down. I'm hoping that Speaker McCarthy is just waiting to negotiate with me when I get home, which has been — I don't know whether that's true or not, we'll find out."
It will take several days to turn any legislative deal into law, including moving the bill through Congress and to Biden's desk. However, McCarthy indicated on Sunday that the timeline remains workable for a compromise.
Meanwhile, the clock is ticking down to avoid a default, which would likely upend both U.S. and international markets.
President Joe Biden speaks during a news conference following the Group of Seven (G7) leaders’ summit in Hiroshima, western Japan, May 21, 2023.Kiyoshi Ota/Pool Photo via AP
During his press conference Sunday, Biden still expressed confidence that "we can reach an agreement," although minutes later, he said, "I can't guarantee that they [GOP] wouldn't force a default by doing something outrageous."
Pressed about the possibility of default while appearing Sunday on ABC's "This Week," House Budget Committee Chair Jodey Arrington insisted that Republicans had done their part by passing a bill last month to raise the debt ceiling, cut spending and reverse key Biden policies — a bill that was quickly rejected by Democrats.
"The question is, will President Biden listen to Janet Yellen, his own secretary? And with the window closing on the x-date, the default date, then respond? We've done our job," Arrington said.
"We've got to rightsize and rein in this bureaucratic bloat" while addressing the "spending problem that's driving the inflation crisis and some of the economic woes that we're experiencing," he said
The president in Japan singled out an impasse over revenue growth, arguing that Republicans are opposed to his proposals to raise some taxes.
He said he is "willing to cut spending, as well as raise revenue, so people start paying their fair share," but that revenues are where negotiators continue to have "significant disagreement."
McCarthy shot back Sunday, insisting that Biden previously acknowledged raising taxes would not be part of any agreement on the debt limit.
"But the president has really shifted right after the more progressive socialist wing of the party stood up and says they want to spend more money. He's now bringing something to the table that everyone said was off the table. It seems as though he wants to default more than he wants to deal," McCarthy said on Fox Business.
Biden commented Sunday on the possibility of unilateral action, saying he had considered invoking the 14th Amendment, which states that the public debt "shall not be questioned." However, he said that leaning on the amendment to get around the debt ceiling would likely cause a court challenge and a subsequent appeal, a delay that would push the country toward default anyway.
MORE: Democrats should get ready for 'Plan B' on debt ceiling and force House vote: Van Hollen
"I think we have the authority," Biden said. "Question is, could it be done and invoked in time that it would not be appealed and, as a consequence, past the date in question, and still default on debt? That's a question that I think is unresolved."
The debt ceiling debate has played out during Biden's trip to Hiroshima to meet with leaders from the G7 and allied countries, making headlines even while the president grapples with issues like sending F-16 fighter jets to Ukraine and relations with China.
The U.S. and other nations broke longstanding vows to not send the planes to Ukraine when they announced this weekend they would start training Ukrainian pilots on the jets and ultimately send some to Kyiv. Western countries had previously been wary of such a move over fears of antagonizing Russia and potentially broadening the conflict in Ukraine.
"I have a flat assurance from Zelenskyy that they will not, they will not, use it to go on and move into Russian geographic territory. But wherever Russian troops are within Ukraine in the area, they would be able to do that," Biden said Sunday, referencing Ukrainian President Volodymyr Zelenskyy.
On China, he added that he expected relations between Washington and Beijing to "thaw very shortly" months after the U.S. shot down what intelligence agencies have said was a Chinese spy balloon, an incident Biden called "silly" on Sunday.
Sourse: abcnews.go.com
