May 23 (Reuters) – Republicans in the U.S. House of Representatives said there had been little progress in talks with the White House on raising the government’s $31.4 trillion debt ceiling, leaving the country at risk of defaulting on the debt in nine days.
Aides to President Joe Biden and Republican House Speaker Kevin McCarthy met again on Tuesday. 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.
White House negotiators Shalanda Young, director of the Office of Management and Budget, and senior White House adviser Steve Ricchetti arrived at the Capitol for late morning talks. They did not speak to reporters, but Ricchetti said they were “back to work.”
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.
“I think things just didn’t go well,” Graves told reporters. “They refuse to really change course, really cut spending, and that’s a red line
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.
“We reiterated that default is off the table and is the only way forward in good faith toward a bipartisan deal,” Biden said in a statement after Monday’s meeting, which he called “productive.”
U.S. stock indexes were lower on Tuesday morning on Wall Street and global markets were on edge due to a lack of clear progress.
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 cannot keep up 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 said he would not approve a tax increase.
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, plunging the nation 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.
“It’s very important to recognize that urgency should be the order of the day. That’s not the vibe I’m getting right now,” said Rep. Patrick McHenry, Republican chairman of the House Finance Committee.
Report by Jared Renshaw; Editing by Heather Timmons and Lincoln Feist.
Our Standards: Thomson Reuters Trust Principles.