President Joe Biden and Republican House Speaker Kevin McCarthy began talks on Wednesday on raising U.S. government borrowing limits, in a first test of how the two will work together and avoid a default that could shake the global economy.
The Democratic president and Republicans, who won control of the U.S. House of Representatives in November’s elections, are locked in a standoff over raising the federal government’s $31.4 trillion U.S. debt ceiling.
Biden’s public schedule allowed for nearly two hours of discussion.
Just before the meeting, White House press secretary Karine Jean-Pierre told reporters: “The president is looking forward to working closely and trying to figure out how we can deliver with Republicans who are willing to work in a good faith, bipartisan way.”
The Oval Office talks serve as the opening bell for months of back-and-forth maneuvering. Neither side expects a solution to emerge from a single meeting. Without action, the government could lose its ability to pay all its bills as early as June.
Biden will ask McCarthy for a specific budget plan and a commitment to supporting the nation’s debt obligations, the White House said, and he will discuss federal spending cuts with Republicans, but only after the debt ceiling is lifted.
House Republicans want to use the debt ceiling as leverage to exact cuts, though they have yet to unite around a specific plan. The increase covers the costs of spending programs and tax cuts previously approved by Congress, and is usually approved on a bipartisan basis.
On his way from the Capitol to the meeting, McCarthy told reporters he would ask Biden: “Does the president want to continue reckless spending or find a way that we can be responsible, sit down and find common ground where we put ourselves on a path to budget, make a balanced budget.”
The 80-year-old president, a longtime former senator who served as vice president during a similar 2011 showdown that led to a historic downgrade of the federal government’s credit rating, enters the talks with what some of his aides believe is a strong hand that includes a narrow Senate majority, a party that is unified on this issue and a strong message for voters.
Speaker for less than a month, McCarthy, 58, leads a fractious House Republican caucus with a narrow 222-212 majority that has given a small group of hardline conservatives outsized influence.
Despite years of mingling with other Washington lawmakers, Biden has little personal history with McCarthy, who joined the Republican leadership on Capitol Hill under former Speaker John Boehner after Biden had already left to become Barack Obama’s vice president.
Just one in four Republicans serving in the House today held their seats in 2011, and some may not be fully aware of the risks of courting default, or the difficulties of negotiating in a divided government.
Unlike most other developed countries, the United States puts a hard limit on how much it can borrow, and Congress must periodically raise that cap because the U.S. government spends more than it takes in.
Minutes before the White House meeting, Federal Reserve chair Jerome Powell told reporters: “There is only one way forward here and that’s for Congress to raise the debt ceiling.
“No one should assume that the Fed can protect the economy from the consequences of failing to act in a timely manner,” Powell said.
The 2011 crisis was resolved with a bipartisan deal that cut spending and raised the debt limit but left Obama administration officials smarting. Many felt they had given up too much and had still harmed the economy by letting talks persist.
McCarthy has less room to maneuver than his Republican counterpart in 2011 did.
To win the speaker’s gavel, he agreed to enable any single member to call for a vote to unseat him, which could lead to his ouster if he seeks to work with Democrats. He also placed three hardline conservatives on the Rules Committee, which would allow them to block any vote on a compromise.
Biden seemed to question McCarthy’s ability to keep Republicans in line at a fundraiser in New York on Tuesday, calling McCarthy “a decent man, I think,” but noting the concessions he made to become speaker.
McCarthy, for his part, said Biden needed to be willing to make concessions to get a debt-ceiling increase through Congress, saying it would be “irresponsible” not to negotiate.