Daily Management Review

Biden And McCarthy Are Optimistic About A Debt-Ceiling Agreement, As The US President Cancels His Trip To Asia


Biden And McCarthy Are Optimistic About A Debt-Ceiling Agreement, As The US President Cancels His Trip To Asia
Democratic President Joe Biden and senior Republican congressional leader Kevin McCarthy moved closer to a compromise to prevent a U.S. debt default on Tuesday, as the possibility of an economic nightmare pushed Biden to cancel a trip to Asia this week.
After an hour of talks, House Speaker Kevin McCarthy told reporters that the two sides were still far apart on a deal to raise the debt ceiling. "It is possible to get a deal by the end of the week," he remarked. It is not difficult to get an agreement."
"There's still work to do," Biden said at a White House event honoring Jewish Americans, saying the parties were "on a path forward to make sure that America does not default on its debt for the first time."
Biden expressed disappointment that Republicans will not consider revenue-raising measures. Raising taxes on the wealthy and corporations to fund programmes for ordinary Americans is a crucial component of Biden's 2024 budget.
After their staffers met over the weekend to try to reach an agreement, Biden met for approximately an hour with McCarthy, Senate Majority Leader Chuck Schumer, Senate Republican Leader Mitch McConnell, and House Democratic Leader Hakeem Jeffries.
Republicans have refused to vote to raise the debt ceiling above its $31.3 trillion level unless Biden and his Democratic colleagues agree to federal budget cuts. After the meeting, McConnell stated, "We know we're not going to default."
The United States may default on some debts as early as June 1 if Congress fails to raise the debt ceiling, and economists believe the country would enter a recession.
Biden is "optimistic that there is a path to a responsible, bipartisan budget agreement if both sides negotiate in good faith and recognise that neither side will get everything it wants," according to the White House.
The staffs of Biden and legislative leaders have met on the topic many times in the last week. McCarthy stated that the negotiations will be narrowed in the future to allow for more dialogue between House Republicans and the White House.
Biden, who leaves for Japan on Wednesday, has said he will call congressional leaders on a daily basis, and the White House has stated he will meet with them upon his return.
Along with Republican Representative Garrett Graves, White House adviser Steve Ricchetti, budget director Shalanda Young, and legislative adviser Louisa Terrell will spearhead conversations for the administration.
Former senior McConnell staffer Rohit Kumar, who is now co-leader of PwC's national tax office in Washington, said such direct negotiations had a track record. "It frees up the administration to make some necessary concessions that will not be popular with House and Senate Democrats but will not jeopardise agreement passage," he said.
The US Chamber of Commerce's top policy officer, Neil Bradley, applauded the negotiations' smaller scope and framework. "We believe there is a path forward on a bipartisan agreement that raises the debt limit and implements critical reforms to improve our nation's fiscal health," he added.
Because of the ongoing uncertainty around the debt ceiling, Biden will forgo trips in Papua New Guinea and Australia after attending a Group of Seven summit of the world's richest countries in Hiroshima, Japan.
"We've got a lot of work to do in a short amount of time," McCarthy told reporters, saying the Oval Office session had set the stage for future conversations.
Sources claimed Biden and McCarthy's staff had reviewed the needs for two crucial programmes that offer food and monetary aid to families before of the meeting.
Republicans have made expanding job requirements a primary demand in exchange for their votes to increase the debt ceiling. McCarthy told reporters on Tuesday that his party, which has a 222-213 majority in the House, would only agree to a package that lowered spending.
"We can raise the debt ceiling if we limit what we're going to spend in the future," McCarthy told reporters.
Both parties agree that immediate action is required.
Both sides' staffs have met in the last week to discuss a variety of problems. According to those briefed on the talks, in exchange for votes to lift the cap, expenditure limitations and changes to energy permits have been proposed, in addition to work requirements for some welfare programmes for low-income Americans.
According to the individuals, who spoke on the condition of anonymity in order to share specifics about closed-door negotiations, the work requirement talks are centred on the Supplemental Nutrition Assistance Programme (SNAP), formerly known as food stamps, and the Temporary Assistance for Needy Families programme.
In public statements over the weekend, Biden referred to the negotiations, saying he would not entertain such a move for the Medicaid health-care programme for low-income Americans.
A similar debt-limit impasse in 2011 resulted in a record reduction of the United States' credit rating, causing a stock market sell-off and raising the government's borrowing costs.
The present impasse has alarmed investors, driving up the cost of insuring exposure to US government debt to new highs. According to a Reuters/Ipsos poll released on Monday, three-fourths of Americans believe a default would be devastating to families like theirs.