Biden, McCarthy fail to reach a debt ceiling deal in Oval Office meeting as default looms

WASHINGTON − An Oval Office meeting Tuesday afternoon between President Joe Biden and top congressional leaders failed to produce a breakthrough in the standoff over raising the debt ceiling as the U.S. lumbers toward a potential default by the end of the month.

"I didn’t see any new movement,” Republican House Speaker Kevin McCarthy said after a one-hour meeting that saw the president and congressional leaders of both parties dig further into positions they've held for months.

The U.S. faces a June 1 deadline to raise the debt ceiling to avoid a government default and a potential economic crisis. After the meeting, McCarthy and Republican Senate Leader Mitch McConnell said Republicans remain committed to spending cuts as part of raising the debt ceiling, while Biden and Democrats made clear they remain opposed.

"The bottom line is very simple: There are large differences between the parties," Senate Majority Leader Chuck Schumer said.

Biden 'absolutely certain' US won't default as new meeting planned for Friday

The meeting, which also included House Democratic Leader Hakeem Jeffries, marked the first time Biden and McCarthy sat down in 97 days.

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Despite the differences, Biden described a "productive meeting about the path forward" in an address from the White House Roosevelt Room afterward and said he's "absolutely certain" a default can be avoided with so little time.

"I made clear during our meeting that default is not an option," Biden said, adding that he's "prepared to begin a separate discussion about my budget and spending priorities not under threat of default."

Biden and the four congressional leaders plan to meet again Friday.

"The United States is not going to default," McConnell said. "It never has and never will."

Yet neither side is budging. From the beginning of talks, Biden has said that raising the debt ceiling is "not negotiable or conditional." But he's been unable to sway any Republicans in Congress to support a debt ceiling increase without cuts that the White House has condemned.

"I asked him numerous times what are some places we can find savings," McCarthy said. "He wouldn't give me any."

White House leverage is slipping

• The White House hoped that deep cuts to government programs proposed by Republicans would prove so unpopular that enough GOP members of Congress would side with the president for Congress to raise the debt ceiling without conditions.
• Instead, Republicans have stayed united. The Republican-controlled House voted last month to approve a bill that would increase the debt ceiling by $1.5 trillion while cutting $4.5 trillion in domestic spending.
• Biden has accused House Republicans of holding the country "hostage" in order to pass extreme spending cuts.
• Yet 43 Republican senators - including Mitch McConnell - sent a leader to Schumer on Monday opposing any package to increase the debt ceiling that doesn't include spending cuts. It means a bill to raise the debt ceiling without spending concessions would lack the 60 votes needed to avoid a filibuster in the Senate.

Sides remain far apart

White House press secretary Karine Jean-Pierre said House Republicans are "manufacturing a crisis" over raising the debt ceiling, which she noted Congress has raised 78 times since 1960.

"The president is not going to change course here," Jean-Pierre said Monday ahead of the meeting. "We've been very, very clear here that they need to do their job."

The two sides have found little common ground besides the commitment of both parties not to touch Social Security or Medicare, the two biggest drivers of the national debt, which has exploded to $31.4 trillion.

The McCarthy-backed bill, which passed the House by a 217-215 vote along party lines, would return discretionary spending to fiscal year 2022 levels and limit spending growth to 1% a year.

The White House has warned the proposal would mean deep slashes to education, child care, veterans benefits and other programs while crippling the administration's efforts to expand domestic manufacturing. Biden has vowed to veto the bill, which has little chance to get through the Democratic-controlled Senate.

On Tuesday, the White House and McCarthy both rejected the option of a short-term extension of the debt ceiling to allow more time to pass a larger increase.

“A short-term extension is not our plan either,” Jean-Pierre said. “This can be easily resolved. This is a man-made crisis that the speaker is leading.”

Countdown to June 1

• The debt ceiling is the maximum amount the U.S. government can borrow to meet existing financial obligations.
• Treasury Secretary Janet Yellen last week warned the U.S. is on pace to run out of money in early June, perhaps as early as June 1, unless Congress takes action to raise the debt ceiling.
• Yellen said the U.S. would not have money to make Social Security and Medicare payments if the country goes into default. Economists fear a chain of events that could plunge the country into a recession.

What are Biden's other options? Biden 'considering' 14th Amendment

To end the impasse, one possible track for Biden could be to entertain spending cuts in separate legislation if McCarthy agrees to support raising the debt ceiling by itself.

"Of course, it’s appropriate to have negotiations about the budget, about spending priorities," Yellen said Sunday on ABC's This Week. "But we do need to raise the debt ceiling to avoid economic calamity."

Yet Republicans have shown no signs they are willing to detach their spending demands from debt ceiling legislation.

Jeffries began the process last week of pursuing a discharge petition - a rarely used procedural move to get a bill out of committee − to force a vote on raising the debt ceiling. But Democrats would need support from five House Republicans for a debt ceiling bill to pass. That level of support doesn't exist at the moment.

As a last resort, Biden could also choose to invoke the 14th Amendment, arguing the debt limit is unconstitutional and the U.S. is required to continue issuing new debt to pay bondholders.

Biden said he's "been considering the 14th Amendment" but said that could result in litigation dragging out proceedings too long to be of help this time. "In the meantime, without an extension, we'd end up at the same place."

Reach Joey Garrison on Twitter @joeygarrison.