WASHINGTON, May 16 (Reuters) – Democratic President Joe Biden and top congressional Republican Kevin McCarthy will sit down on Tuesday to try to make progress on a deal to raise the U.S. government’s $31.4 trillion debt ceiling and avert an economic catastrophic failure.
They have a short time to reach an agreement. The US Treasury repeated its warning on Monday that it could lack the money to pay all its bills as early as June 1, triggering a default that economists say is likely to trigger a sharp economic downturn.
House Speaker McCarthy told reporters Tuesday that his party, which controls the chamber by a 222-213 margin, would only agree to a deal that cuts spending.
“We can raise the debt ceiling if we limit what we want to spend in the future,” McCarthy told reporters.
Both parties agreed on the need for swift action. Tuesday’s White House meeting, which will include Biden, McCarthy, Senate Democratic Majority Leader Chuck Schumer, top Senate Republican Mitch McConnell and top House Democrat Hakeem Jeffries, is set to begin at 6 p.m. 3 p.m. EDT (1900 GMT).
In the past week, staff from both sides have discussed a range of issues, including spending caps, new work requirements for some benefit programs for low-income Americans and changes to energy that allow in exchange for votes to lift the cap, according to people familiar with the matter. the conversations.
“Time is running out. Every single day that Congress does not act, we are seeing increased financial costs that could slow down the American economy,” Treasury Secretary Janet Yellen told a group of bankers. “There is no time to waste.”
A similar standoff in 2011 led to a historic downgrade of the US credit rating, triggering a sell-off in stocks and pushing up government borrowing costs.
The current situation has rattled investors and sent the cost of insuring exposure to U.S. government debt to record highs, and a Reuters/Ipsos poll concluded on Monday showed three-quarters of Americans fear a default would hit families like theirs. .
“No one should hold default hostage,” Schumer said in a speech on the Senate floor Tuesday. “The consequences would be devastating for America.”
‘TOO MANY COOKS’
Some observers have expressed concern that the five-party talks are too unwieldy to make progress.
No. 2 Senate Republican John Thune told reporters that the negotiations appear to have “too many cooks.”
“As we’ve said all along, it’s Biden and McCarthy,” Thune said. “So whoever can actually speak for the president needs to get in the room and get McCarthy’s best people in there and get it done.”
McCarthy himself said he would prefer one-on-one talks with Biden.
“If the president comes to an agreement, the Democrats in the Senate will vote for it. The House will pass it if we all agree,” McCarthy said. “Why are we wasting more time going around and around without solving any of the real problems? I think you’re putting the country at risk when you do that.”
Adding to the challenge of reaching a deal, when McCarthy became speaker earlier this year, he agreed to a change to House rules that allows only one member to call for removal as leader of the chamber , giving more power to hardliners, including about three dozen members of the House Freedom Caucus.
Reporting by David Morgan and Jarrett Renshaw, additional reporting by Jeff Mason, Richard Cowan and Moira Warburton; Editing by Scott Malone and Rosalba O’Brien
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