WASHINGTON (Reuters) – U.S. President Joe Biden and top Republican congressman Kevin McCarthy said on Wednesday they aim to reach an agreement by Sunday to raise the federal government’s debt limit to $31.4 trillion and avoid an economically devastating default .
After a month of confrontation, the Democratic president and the speaker of the House of Representatives agreed on Tuesday to directly negotiate a deal that has to be reached by both houses of Congress before the federal government runs out of money to pay its bills. and must be approved. , as soon as June 1st.
“We’re going to meet because there’s no choice,” Biden told reporters at the White House. “To be clear, this conversation is about the general lines of the budget, not about whether or not we’re going to (pay off our loans),” he said. “The (Congress) leaders are all on the same page: We are not going to lapse. All the leaders have said so.”
Republicans, who control the House of Representatives by a 222-213 majority, have been pushing for months that Democrats accept spending cuts in exchange for a deal to raise Congress’s self-imposed debt limit. The cap must be increased periodically as the government spends more than it collects in taxes.
Asked by reporters on Capitol Hill whether a debt ceiling deal was possible by the time Biden returned from a trip to Asia on Sunday, McCarthy replied: “It’s possible.”
“We’re on a very tight deadline,” McCarthy said. “It makes it more difficult. But I never give up. I have guts, tenacity and we’re going to get through this.”
The two-way talks streamline the previous five-way format last week, which was attended by the other three top Congress leaders.
Biden traveled on Wednesday to Japan for the Group of Seven World Leaders Summit to be held from Friday to Sunday. Before leaving, he said he would speak to top MPs on phone during the meeting and would meet them again on his return.
On Tuesday, Biden and McCarthy met for about an hour at the White House with Senate Majority Leader Chuck Schumer, Senate Republican Leader Mitch McConnell and House Democratic Leader Hakeem Jeffries.
Financial markets seemed enthused by those talks, with Wall Street rising on Wednesday, partly on cautious investor optimism that talks continued.
The Treasury has said it could start running out of money on June 1 to pay government bills, a move economists fear could trigger a recession.
Negotiators aim to reach an agreement before Biden returns to Washington. Congress must act quickly before the June 1 deadline.
McCarthy said the House would vote before sending any deal to the Senate, which the Biden Democrats control by a 51-49 margin, for approval. Senate rules would require at least nine Republicans to support any deal.
Negotiations are ongoing over the length of the deal, job requirements for programs to help the poor, including food subsidies, and spending limits.
Asked by CNN whether Biden wants the debt ceiling deal to last through 2025, White House spokeswoman Karine Jean-Pierre declined to answer.
He also did not give details about talks regarding expanding work requirements for two programs that provide food and cash assistance to low-income families, which Republicans want to see as part of a pact.
In a statement, Jeffries said he hoped a bipartisan agreement would be reached, but that House Democrats would file a “discharge petition” if necessary to act on the debt limit and bypass normal House procedures to avoid default.
In an interview with CNBC, McCarthy defended the Conservatives’ call for labor requirements, saying they would help the economy and boost the workforce, and vowed to shut down any discussion of taxes.
Raising taxes on the wealthy and corporations to help pay for programs for other Americans is a key part of Biden’s 2024 budget, and the president said Tuesday he was disappointed Republicans weren’t considering ways to raise revenue.