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 Group of Seven Summit in Hiroshima, Japan.
McCarthy told reporters at the U.S. Capitol that the call was “productive,” and said that the discussion would continue this evening.
“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 warned, “There’s no agreement on anything.”
The same day, Biden again floated an idea that has long circulated among Democrats: that the president could use a clause in the 14th amendment to unilaterally raise the debt ceiling without congressional authorization.
Biden said the White House was looking into the legality and practicality of the move, indicating that he’s still not convinced 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 ongoing negotiations has insisted that the United States will not default.
For months, Republicans and Democrats have been gridlocked over the debt ceiling, which describes the maximum amount of money the U.S. Treasury can borrow. Both chambers of Congress have to approve a debt ceiling increase for it to move forward. 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 around 22 percent.
These cuts include more stringent work requirements for Medicaid coverage and food stamp benefits. Other GOP demands include a repeal of funding that could allow the IRS to hire as many as 87,000 new tax agents, as well as demands for tighter border security.
Democrat leaders have described these proposals as “unacceptable,” and have instead pushed for the passage of a “clean” debt ceiling increase with no spending cuts or other provisions attached.
Treasury Secretary Janet Yellen has said the United States could default as early as June 1 if no progress is made on raising the debt ceiling. On May 21, she added, “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 GOP 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 GOP caucus making the same demands.
A letter led by Sen. Mike Lee (R-Utah) also demanded substantial reforms in exchange for a debt ceiling bump. In the letter, Lee and 42 other senators, including Senate Minority Leader Mitch McConnell (R-Ky.), 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.
McCarthy and Biden are set for another meeting after Biden returns on May 21, followed by a planned meeting the next day.