WASHINGTON (CN) — The four top congressional leaders expressed confidence Tuesday that a debt limit deal can be reached after their second meeting with President Joe Biden and as the clock continues to click toward a projected national debt default.
Treasury Secretary Janet Yellen has predicted that by June 1, the country will have exhausted any accounting measures that have enabled it to avert a default on its loans, having already hit the debt limit of $31.4 trillion in January.
The lack of a resolution caused Biden to cancel part of his upcoming trip to the Indo-Pacific. He’s scheduled to leave Wednesday to travel first to Japan, primarily for the G7 Summit, and was scheduled to travel to Australia and Papua New Guinea but those plans have been called off.
At least publicly, Biden and House Speaker Kevin McCarthy have stood steadfast in their positions for weeks. McCarthy and his fellow Republicans don’t want to raise the debt limit without spending cuts, including reimplementing work requirements for welfare programs and striking tax incentives for renewable energy generation. Biden has said the debt limit should be raised with no strings attached.
McCarthy told reporters after Tuesday's meeting that Biden has appointed someone to meet with his team and conduct negotiations behind the scenes. He was optimistic a resolution could come this week.
“I wish we would have been here 100 days ago, but here we are,” he said. “It’s possible to make a deal by the end of the week. It’s not that difficult to come to an agreement.”
After the meeting, the White House said staffers will continue to meet daily to negotiate an agreement.
Defaulting on the federal debt would have dire ramifications for the U.S. economy and could trigger a recession. Previous standoffs have threatened the country’s credit rating.
“We all agreed that default is not an acceptable option and must be avoided,” said House Minority Leader Hakeem Jeffries.
Senate Majority Leader Chuck Schumer said default would be a “disaster.”
“We have to come to common ground,” the New York Democrat said. “That’s the only way this has ever gotten done.”
Biden is being criticized by some progressive Democrats for potentially giving into Republican demands, especially on federal aid programs.
“Democrats cannot give ground on work requirements in the debt ceiling talks,” said Representative Pramila Jayapal, a Washington Democrat. “All work requirements do is limit the availability of food aid for families and hurt poor, marginalized communities – the very people we were elected to defend.”
Lawmakers have pushed against the debt deadline seven other times since 2011, each time with agreements announced less than a month before the projected default, according to the Bipartisan Policy Center.
The ongoing standoff is the third time Republicans have pushed for a Democratic president to negotiate the debt ceiling in exchange for spending cuts, each time with Biden in the executive branch.
Former President Barack Obama, with Biden as his vice president, faced similar demands in 2011 and 2013. The 2011 crisis ended two days before default with Republicans agreeing to increase the limit by $900 billion in exchange for $917 billion in cuts over 10 years. The 2013 crisis resulted in a temporary federal government shutdown before a resolution was reached.
The debt ceiling was last raised in December 2021.
House Republicans passed a budget last month that raises the debt ceiling, but Democrats have said it is a nonstarter. Though it would raise the debt limit by roughly $1.5 trillion until March 31, the government would have to reduce federal spending to 2022 levels and limit growth to just 1% annually over the next decade.
Senate Democrats are considering a bill that would raise the debt ceiling without conditions, but Republicans have already signaled that they would oppose that measure.
Senate Minority Leader Mitch McConnell said the negotiations are “not unusual.”
“This shouldn’t be this hard,” he said. “We know we’re not going to default.”
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