Speaker of the House Kevin McCarthy (R-Calif.) said on May 21 that Republicans and President Joe Biden can find “common ground” on the debt ceiling despite lingering “philosophical” disagreements.
McCarthy and Biden reportedly discussed the matter again as Biden returned home on Air Force One from the G-7 Summit in Hiroshima, Japan.
McCarthy told reporters at the U.S. Capitol that the call was “productive” and that the discussion would continue on the evening of May 21.
“I think we can solve some of these problems if he understands what we’re looking at,” McCarthy said of the president. “But I’ve been very clear to him from the very beginning. We have to spend less money than we spent last year.”
But despite this optimism, McCarthy said that “there’s no agreement on anything.”
Biden said the White House was looking into the legality and practicality of the move, indicating that he still isn’t convinced that a deal can be reached.
During his May 21 press conference, Biden accused Republicans of “extreme positions” and said, “It’s time for Republicans to accept that there is no deal to be made solely, solely, on their partisan terms.”
Every leader involved in the negotiations has insisted that the United States won’t default.
For months, Republicans and Democrats have been gridlocked over the debt ceiling, which is the maximum amount of money that the U.S. Treasury can borrow. An increase of the debt ceiling requires approval from both chambers of Congress. Without a debt ceiling increase, the United States will default for the first time in history, an outcome that would have catastrophic effects on the value of the dollar.
Republicans under McCarthy’s leadership have demanded spending cuts in order to agree to a debt limit increase, citing the need to get the U.S. deficit and national debt, which currently exceeds $31.4 trillion, under control. To achieve this end, Republicans’ proposal would cut spending by about 22 percent.
These cuts include more stringent work requirements for Medicaid coverage and food stamp benefits. Other Republican demands include tighter border security and a repeal of funding that could allow the IRS to hire as many as 87,000 new tax agents.
Democratic leaders have described these proposals as “unacceptable” and have pushed for the passage of a “clean” debt ceiling increase with no spending cuts or other provisions attached.
Treasury Secretary Janet Yellen has said that the United States could default as early as June 1 if no progress is made on raising the debt ceiling. On May 21, she said, “I think that that’s a hard deadline.”
For months, Biden refused to negotiate with Republicans over the debt ceiling. That changed after McCarthy corralled the divided Republican caucus into backing the Limit, Save, Grow Act, a bill that would raise the debt ceiling but cut spending.
Pressure on the issue has also come from the Senate, with most of the Senate Republican caucus making the same demands.
A group of 43 senators, including Senate Minority Leader Mitch McConnell (R-Ky.) and led by Sen. Mike Lee (R-Utah), wrote a letter demanding substantial reforms in exchange for a debt ceiling bump; the group agreed with McCarthy’s demands.
“We will not be voting for cloture on any bill that raises the debt ceiling without substantive spending and budget reforms,” the senators wrote.
The coalition includes enough votes to derail any deal in the Senate that doesn’t contain spending cuts.
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