May 23 (Reuters) – White House and congressional Republican negotiators met again on Tuesday to resolve a months-long deadlock on raising the government’s $31.4 trillion debt ceiling, as the country faces a nine-day debt default.
Aides to President Joe Biden and Republican House Speaker Kevin McCarthy will meet again on Tuesday, McCarthy’s top negotiator said. The two parties are deeply divided over how to control the federal deficit, with Democrats arguing that wealthier Americans and businesses should pay more taxes while Republicans want spending cuts.
The Treasury Department has warned that the federal government may not have enough money to pay all its bills by June 1, triggering a default that would hammer the U.S. economy and raise borrowing costs.
Rep. Garrett Graves, the Republican negotiator, said he had seen little progress.
“They really refuse to change course, really cut spending, and that’s a red line,” Graves told reporters at the Capitol.
Biden and McCarthy talked about the need for bipartisan compromise during Monday evening’s meeting on the debt ceiling, even as they espouse policies that expose bipartisan divides.
A lack of clear progress continued to weigh on Wall Street, with U.S. stock indexes opening lower Tuesday morning and global markets on edge.
Biden and Democrats want to freeze spending in fiscal year 2024 at the level adopted in 2023, arguing that would mean spending cuts because agency budgets do not keep pace with inflation. The idea was rejected by Republicans who wanted spending cuts.
Biden wants to reduce the deficit by raising taxes on the wealthy and closing tax loopholes for the oil and pharmaceutical industries. McCarthy declared that raising revenue was a non-starter.
“I don’t think it’s a revenue problem. It’s a cost problem,” McCarthy said.
McCarthy told reporters on Monday that he expects to speak with Biden at least daily by phone.
If Biden and McCarthy reach a deal, they will have to sell it to their caucuses in Congress. Passing a deal through the House and Senate could easily take a week, requiring Biden to approve the bill before signing it into law.
on common ground
Unless Congress raises the debt ceiling and allows the federal government to borrow money to pay its bills, America will default on its obligations for the first time in history, plunging the country into recession and plunging global financial markets into chaos.
Any deal to raise the cap would have to pass both houses of Congress and would therefore depend on bipartisan support. McCarthy’s Republicans control the House 222-213, while Biden’s Democrats hold the Senate 51-49.
Despite the obstacles, the two sides have found some common ground in several areas, including permitting reform, to help energy projects move forward.
On Monday, McCarthy said not all issues related to adding some permit reforms to the debt deal could be resolved and that talks on further reforms could continue later, ruling out a trade-off for renewable energy.
The two sides are also debating returning unused Covid relief funds and imposing tougher work requirements on two popular public welfare programs that help lift Americans out of poverty.
But the leaders cautioned that nothing had yet been agreed upon.
“No one is going to agree to anything until we have a final deal,” said Rep. Patrick McHenry, the Republican chairman of the House Finance Committee.
(This story has been corrected to remove reference to meeting start time in paragraph 2)
Report by Jared Renshaw; Editing by Heather Timmons and Lincoln Feist.
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