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Biden, McCarthy see deal in reach to avoid US default as staff negotiations continue

2023-05-17T14:50:51Z

President Joe Biden will continue talks with congressional leaders on the United States’ debt limit later this week, the White House said on Wednesday, as U.S. House Speaker Kevin McCarthy vowed to avoid a default.

“I think at the end of the day, we do not have a debt default,” the Republican congressman said in an interview with CNBC.

“The thing I’m confident about is now we have a structure to find a way to come to a conclusion. The timeline is very tight. But we’re going to make sure we’re in the room and get this done,” he added.

Biden, who leaves on Wednesday for the Group of Seven summit of world leaders Friday through Sunday in Japan, will speak with top lawmakers by telephone while attending the meetings, and will meet with top lawmakers again on his return, White House spokeswoman Karine Jean-Pierre said in television interviews.

“He’s optimistic that we’ll get to a reasonable, bipartisan budget deal that can get to his desk next week that he can sign,” Jean-Pierre told CNN, adding that daily staff-level talks are expected to continue this week.

The comments came the day after Biden and the House’s top Republican 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 appeared to be buoyed by Tuesday’s discussions as McCarthy joined McConnell and the White House in pledging the U.S. would not fail to pay its debt obligations.

U.S. stock indexes opened higher on Wednesday, in part amid cautious optimism among investors as talks continued. The U.S. Treasury has said it could start running out of funds as early as June 1 to pay the government’s bills — a move economists fear will trigger a recession.

After Tuesday’s meeting, McConnell told reporters: “We know we’re not going to default.” Biden called the discussion productive.

Jean-Pierre, too, stood by the White House’s stance that the country would not default, and told CNN that Biden’s decision to cut short his Asia trip sends “the other message too, is that … America does not default on its debt.”

Negotiators are aiming to hammer out an agreement before Biden’s scheduled return to Washington on Sunday. Congress would then have to take swift action before Treasury’s June 1 deadline hits.

Negotiations are continuing over the longevity of any deal, work requirements for aid programs for the poor, including food subsidies, and spending caps.

Asked on CNN if Biden wanted the debt limit agreement to last through 2025, Jean-Pierre declined to answer.

She also did not give details on negotiations over expanding work requirements for the two programs that provide food and cash aid to low-income families, which Republicans want to see included as part of a deal.

“The Republican proposals – they want to cut healthcare, they want to increase poverty, and it’s not going to save much money,” she told CNN, adding that daily staff talks between both sides were expected to continue.

House Democratic leader Jeffries said it was “unreasonable” to include work requirements in any deal to pay debts the nation has already incurred but that they could be discussed as part of other legislation.

“I’m optimistic that common ground can be found in the next week or so,” he told CNBC.

In a statement, Jeffries said he was hopeful a bipartisan deal would be reached but that House Democrats would file a “discharge petition” in case it was needed to bypass regular chamber procedures to act on the debt limit and avoid a default.

McCarthy, whose fellow Republicans control the House, on CNBC defended conservatives’ call for work requirements, saying they would help the economy and boost the workforce, and vowed to exclude any discussion of taxes.

Raising taxes on the wealthy and companies to help pay for programs for other Americans is a key part of Biden’s 2024 budget, and the president on Tuesday said he was disappointed that Republicans will not consider ways to raise revenue.

Related Galleries:

U.S. President Joe Biden is flanked by Vice President Kamala Harris and Senate Majority Leader Chuck Schumer (D-NY) as he hosts debt limit talks with HSenate Minority Leader Mitch McConnell (R-KY), House Speaker Kevin McCarthy (R-CA), and Congressional leaders in the Oval Office at the White House in Washington, U.S., May 16, 2023. REUTERS/Evelyn Hockstein

Speaker of the House Kevin McCarthy (R-CA) speaks at the the New York Stock Exchange (NYSE) in New York City, U.S., April 17, 2023. REUTERS/Brendan McDermid
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