McCarthy and Biden’s Debt Ceiling Talks: ‘Slightly More Productive’

Breaking News: Biden and McCarthy Delegating Debt Ceiling Negotiations to Surrogates

President Joe Biden and House Speaker Kevin McCarthy (R-Calif.) have established a clearer process for resolving the standoff between the parties over raising the debt ceiling and cutting spending. They have delegated primary negotiations to trusted surrogates.

Who’s Negotiating?

• Steve Richetti, counselor to the president, and Shalanda Young, director of the Office of Management and Budget, will negotiate on behalf of the president.
• Rep. Garret Graves (R-La.) and members of McCarthy’s staff will take the lead for the speaker.

McCarthy announced the process change after an hour-long meeting with the president and other leaders on May 16, the second attempt at negotiations between the two.

“I did think this one was a little more productive. We’re a long way apart. But what changed in this meeting was the president has now selected two people from his administration to directly negotiate with us,” McCarthy said.

Also present were Vice President Kamala Harris, Senate Majority Leader Chuck Schumer (D-N.Y.), Senate Minority Leader Mitch McConnell (R-Ky.), and House Minority Leader Hakeem Jeffries (D-N.Y.).

Why the Rush?

Treasury Secretary Janet Yellen notified Congress on Jan. 13 that the country was approaching the debt ceiling. On May 15 she informed Congress that the Treasury would lack the funds to meet all U.S. financial obligations by “early June, and potentially as early as June 1” if the debt ceiling were not increased.

“In my assessment—and that of economists across the board—a U.S. default would generate an economic and financial catastrophe,” Yellen said in remarks to a group of independent community bankers on May 16.

“The U.S. economy hangs in the balance. The livelihoods of millions of Americans do, too. There is no time to waste. Congress should address the debt limit as soon as possible.”

What’s the Holdup?

McCarthy lamented the fact that no negotiations had taken place prior to last week.

“Unfortunately, the Democrats wasted four months, saying it had to be a clean debt ceiling or they wouldn’t negotiate. Well, you know what, all that has changed now. And now we’re at a place we should have been back in February,” McCarthy said.

The president and the speaker had been in a standoff over raising the nation’s $31.4 trillion debt ceiling since January. Biden has insisted that it must be raised without condition to preserve the full faith and credit of the United States.

McCarthy has said there will be no increase without an agreement to cut spending. Republicans have proposed lowering discretionary spending to the 2022 level, capping spending growth at 1 percent annually for a decade, clawing back unspent COVID-19 relief funds from the states, and loosening regulations on oil and gas drilling.

The White House has maintained that raising the debt limit is lawmakers’ “constitutional duty.” House Republicans have countered that they did raise the limit by passing the Limit, Save, Grow Act on April 26, though the measure was not taken up by the Senate.

What’s Next?

Biden has said he believes a deal is within reach, though neither side has mentioned specific progress.

“I remain optimistic because I’m a congenital optimist. But I really think there’s a desire on their part, as well as ours, to come to a conclusion,” Biden said.

Time is ticking, and the clock is running out. Will they reach a deal before the June 1 deadline?