WASHINGTON, May 22 (Reuters) – President Joe Biden and top Republican Rep. Kevin McCarthy are set to meet on Monday to discuss raising the federal debt ceiling, 10 days before the United States faces an unprecedented debt default.
The White House said the Democratic leader and the speaker of the Republican-controlled House of Representatives will meet at 5:30 p.m. EDT (2130 GMT).
Any deal to raise the $31.4 trillion debt ceiling would have to pass both houses of Congress before Biden could sign it into law. The US Treasury has warned that it will not be able to pay all its bills by June 1.
Officials said officials from both sides met for more than two hours on Monday.
Failure to raise the debt ceiling could roil financial markets and trigger defaults that would raise interest rates on everything from car payments to credit cards. The current uncertainty is already weighing on investors and stocks.
US markets rose on Monday as investors awaited updates on the talks.
McCarthy’s Republicans control the House 222-213, while Biden’s Democrats hold the Senate 51-49, making bipartisan agreement difficult to reach.
Republicans are pushing for discretionary spending cuts and increases in defense spending in exchange for supporting an increase in the government’s self-imposed debt limit that offsets the costs of spending and tax cuts previously approved by lawmakers.
“The basic issue here is that the Democrats have become addicted to spending since they got the majority, and that has to stop,” McCarthy told reporters on Monday. “We’re going to spend less than we spent last year.”
Democrats want to keep spending steady at this year’s levels, while Republicans want to return to 2022 levels. A plan passed by the House last month would cut government spending by 8% next year.
A White House official said Monday that Republican negotiators have proposed additional cuts to programs that provide food assistance to low-income Americans, saying no deal could pass Congress without bipartisan support.
Biden, who has made the economy a centerpiece of his domestic agenda and is running for re-election, has said he would consider spending cuts along with tax changes, but called the Republicans’ latest offer “unacceptable.”
The president tweeted that he will not support “Big Oil” subsidies and “rich tax cheats” while jeopardizing health and food assistance for millions of Americans.
Both sides must weigh any concessions against pressure from hard-line factions within their own parties.
Some members of the far-right House Freedom Caucus insisted on halting the talks, demanding that the Senate take up their House-passed legislation, which was rejected by Democrats. After losing the 2020 election to Biden, former Republican President Donald Trump has urged members of his party to minimize any economic consequences and force default if all of their goals are not met.
Liberal Democrats have pushed back against any cuts that would harm families and low-income Americans, with some urging Biden to act on his own by invoking the Constitution’s 14th Amendment — something the president said Sunday would face sanctions.
The amendment states that “the validity of the public debt of the United States … shall not be questioned,” but this provision has often been overlooked by courts.
After months of refusing to negotiate on the debt ceiling and insisting that Republicans must pass a “clean” unconditional increase before agreeing to any spending talks, Biden is looking for a solution.
In Japan on Sunday, he acknowledged the political implications, saying some far-right House Republicans “know the damage it will do to the economy.”
Reporting by David Morgan, Richard Cowan and Andrea Shalal; Written by Susan Hevey; Editing by Lisa Shumaker and Stephen Coates
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