Biden and McCarthy will meet to try to break the debt ceiling logjam

WASHINGTON — President Joe Biden and House Speaker Kevin McCarthy are scheduled to meet Tuesday afternoon to discuss a way to break the logjam on the debt ceiling, with fears of a self-inflicted economic calamity growing as Republicans demand spending cuts.

Failure to reach an agreement to lift the borrowing limit threatens the first-ever default on the nation’s $31.4 trillion debt, an outcome that could prove catastrophic for the U.S. economy and upend the political landscape.

White House officials don’t expect any kind of completed framework from Tuesday’s meeting with congressional leaders, according to a source familiar with the discussions, and they aren’t bracing for any kind of agreement before Biden leaves for Japan on Wednesday. One area of contention is GOP demands to impose tougher work requirements for federal aid programs, which is facing Democratic pushback.

The House-passed proposal, negotiated between GOP members and approved on party lines, would require able-bodied adults up to age 55 to work a minimum of 20 hours per week, or satisfy other criteria, in order to get food stamps for more than three months every three years.

There are potential areas of common ground that staff have identified in daily talks over the last six days, including permitting reform for energy and infrastructure projects and the possibility of spending cuts on a parallel track to raising the debt ceiling.

And while Biden has said that cuts to federal aid that could throw Americans into poverty are off the table, the president has signaled that he may be open to concessions on work requirements in order to reach a spending deal.

McCarthy has said the inclusion of work requirements is a red line in the talks. The Republican-backed proposal, however, required intraparty negotiations and details were a point of contention.

Biden told reporters on Sunday that he “voted for tougher aid programs” while a senator. “That’s in the law now,” the president said. “But for Medicaid, it’s a different story.”

“The work requirements on cash assistance that the president voted for in the 1990s are still the law today,” White House spokesman Michael Kikukawa in a statement. “As the President said, Medicaid is a different story, and the President has been clear that he will not accept proposals that take away peoples’ health coverage. The president has also been clear that he will not accept policies that push Americans into poverty.”

The official added, “He will evaluate whatever proposals Republicans bring to the table based on those principles.”

Biden struck a tougher line against the push on Monday, when he appeared to rule out cuts to the Supplemental Nutrition Assistance Program, or SNAP, a program that provides grocery aid, tweeting that Republicans were threatening food aid for seniors.

Senate Majority Whip Dick Durbin, D-Ill., also threw cold water on tougher work requirements, saying they’re already law for most federal programs.

“I know this is raw meat for the Republicans to talk about the ‘welfare queens’ and the like, but the reality is when we’re talking about children getting food stamps to survive on, work requirements don’t make any sense at all,” Durbin said Tuesday. “To make this the center point of our negotiation to crater the American economy is ridiculous.”

Other Democrats have pushed back on the idea of work requirements, including Sen. John Fetterman of Pennsylvania.

“SNAP already has work requirements. I didn’t come here to take food away from hungry kids, and that’s exactly what this proposal would do; a proposal that would make Scrooge blush,” Fetterman said, referring to the House GOP plan. “I’ve never met a SNAP recipient who aspires to stay on SNAP for life. Let’s end the games, pay our bills, and get on with the important work people sent us here to do.”

Work requirements for government aid programs are “a non-starter for me,” Sen. Ro Khanna, D-Calif., said in an interview on MSNBC's "Andrea Mitchell Reports," arguing that the cuts are harmful and ineffective. “Work requirements don’t make people work more, what it does is deprive of folks who need the help,” Khanna said. “It’s just cruel.”

The White House expects staff-level talks will continue while the president is overseas, and he will be briefed daily while traveling.

McCarthy sounded a pessimistic tone.

“We just had our secretary say June 1 we could run out of money. We only have so many days left,” McCarthy, R-Calif., said Monday. “So, no, I don’t think we’re in a good place. I know we’re not.”

Treasury Secretary Janet Yellen said in a letter Monday that the U.S. is still projected to exhaust all options to keep paying the country’s bills as early as June 1, leaving Congress with fewer than three weeks to avert a potential worst-case scenario.

In remarks ahead of the meeting Tuesday, Yellen stressed the urgency of striking a deal and warned of stark economic implications “if Congress has not acted to address the debt limit by early June, and potentially as early as June 1.”

“It’s impossible to predict with certainty the exact date when Treasury will be unable to pay off the governments bills,” she said at the Independent Community Bankers of America’s 2023 Capital Summit.

The meeting among Biden, McCarthy and other congressional leaders was postponed from Friday; some lawmakers said they wanted to give staff-level negotiators more time to develop a framework for the principals to discuss.

Biden met with McCarthy, Senate Majority Leader Chuck Schumer, D-N.Y., Senate Minority Leader Mitch McConnell, R-Ky., and House Minority Leader Hakeem Jeffries, D-N.Y., last Tuesday. Since then, White House and Capitol Hill staffers have held private meetings to consider a path forward, but they’ve been tight-lipped about the details of the negotiations. It’s unclear how much progress they have made.

Vice President Kamala Harris is also expected to join Tuesday’s meeting, which is scheduled for 3 p.m. ET, according to a source familiar with her plans.

Schumer insisted Monday that default must “be off the table.”

“Speaker McCarthy must commit to the same,” he said. “The consequences of default are too terrible.”

Biden has been reluctant to characterize the talks while they’re ongoing but said last week he is “certain” default can be averted, and he remained hopeful over the weekend.

“I remain optimistic because I’m a congenital optimist, but I really think there’s a desire on their part as well as ours to reach agreement,” Biden said Sunday. “I think we’ll be able to do it.”

He didn’t respond when he was asked about his message for McCarthy.

The Republican-led House is demanding spending cuts and policy changes to lift the debt ceiling. Biden and the Democratic-controlled Senate insist that paying the bills is nonnegotiable and that next year’s budget should be dealt with separately.

With talks continuing and a deal not yet within reach, the White House said Tuesday that Biden would travel to Japan but is “reevaluating” his trip to Asia this week.

Biden will a summit of the Group of Seven major industrial countries in Japan and plans to follow that with a “Quad” meeting with the leaders of Australia, India and Japan in Sydney on May 24. The president is scheduled to visit Papua New Guinea on his way to Sydney.

“We’re working through, thinking through the rest of the trip right now,” White House spokesman John Kirby said Tuesday. “If the trip gets truncated or changed or modified in any way, it should be nothing more than a statement of the president putting his priorities where he believes that needs to be.”

Pressed by reporters, Kirby added, “There’s not been a cancellation yet, but that could happen.”

Kirby said Biden would meet with Japanese Prime Minister Kishida Fumio on the margins of the G7, as well as the other members of the Quad, Indian Prime Minister Narendra Modi and Australian Prime Minister Anthony Albanese.

Pressure to reach a deal is growing even as the two parties appear far apart.

A debt ceiling bill passed by House Republicans would cut the budget to fiscal year 2022 levels, slashing $131 billion from current spending. Democrats want to increase spending on health care, education and other domestic priorities, leaving the two sides to find other avenues for spending cuts; one possibility Biden and Republicans have floated is pulling back unspent Covid funds. Another possibility is reforms that would speed the process of getting permits for energy projects backed by the White House and centrist Sen. Joe Manchin, D-W.Va.

Still, Biden has continued to put pressure on Republicans, calling the looming default “a manufactured crisis” and insisting the responsibility falls on Congress to avoid it.

The White House has portrayed House Republicans as the only party to the talks willing to accept default as an outcome.

“Three of the four have said that we have to avoid default,” White House press secretary Karine Jean-Pierre told reporters Friday. “They’ve been very clear — we have to take default off the table. I will let you guess who was the fourth that did not say that.”