White House budget officials and key House Republican negotiators are resuming talks Wednesday to increase the U.S. government’s borrowing limit before it runs out of cash to pay its bills in the coming week or so and at the same time trim future federal spending.
Republican House Speaker Kevin McCarthy told reporters that the negotiations were still productive, but days of talks have yet to produce an agreement that Democratic President Joe Biden and McCarthy believe could win a majority vote in both houses of Congress.
McCarthy and Biden met at the White House on Monday, and McCarthy said they would get together again later Wednesday.
“I firmly believe we will solve this problem,” McCarthy said. “We’re not going to default.”
It remained unclear, however, exactly how Biden and Democrats pushing for only relatively modest trims in government spending and Republicans pushing for steeper cuts could get to an agreement, and to what extent the debt ceiling would be increased beyond its current $31.4 trillion figure.
“I will not raise taxes,” McCarthy declared, rejecting a White House proposal to increase taxes on the wealthiest U.S. taxpayers and large corporations. Nor, he said, would he allow a House vote on a measure to raise the debt ceiling without accompanying it with spending cuts.
“Sixty percent of Americans believe we should not raise the debt ceiling without cutting spending,” he said.
Treasury Secretary Janet Yellen has repeatedly said the government will soon run out of enough money to meet its obligations, such as interest on government bonds, salaries for federal workers and government contractors and stipends to pensioners. The government could default for the first time as soon as next week, on June 1, she said.
The government reached its existing borrowing limit in January, but the Treasury adopted “extraordinary measures” since then to keep paying its bills. Without enough new tax receipts flowing into government coffers in the first days of June, the government would then face the difficult choice of deciding which bills to pay.
Officials have warned that a default by the United States, the biggest global economy, could prove catastrophic, roiling the world’s stock markets, forcing job layoffs in the U.S. and hurting the U.S. credit standing, resulting in higher interest rates for borrowers.
The U.S. government has raised its debt ceiling 78 times over several decades, under both Democratic and Republican presidents, and three times under former President Donald Trump.
The current dispute is complicated with the Democrats controlling the White House and narrowly the Senate, while McCarthy has a slim Republican edge in the House.
Aside from agreeing to increase the debt ceiling for a year, hard-line Republicans in the House have insisted on sharply cutting back government spending over at least the next six years. The White House wants a debt limit extension past the November 2024 presidential election, in which Biden is seeking a second term and flat, as-is government spending limited to the next two years.
But the two sides have yet to agree on a way to bridge their differences. Talks broke off Tuesday without any apparent progress.
House Republicans want to reduce federal spending back to 2022 levels and impose strict work requirements for Americans enrolled in such low-income relief programs for food and cash assistance and the Medicaid health insurance program.
The White House wants to end tax breaks for wealthier Americans and some corporations, although Republicans remain opposed to any tax increases or cuts in defense spending. Republicans have instead proposed sharp cuts in other government programs except for those at the Pentagon.
White House spokeswoman Karine Jean-Pierre told reporters Tuesday that the negotiations were “moving forward,” but said that both Democrats and Republicans “have to understand that they’re not going to get everything they want.” She said the goal is “to get to a budget that is reasonable, that is bipartisan, that Democrats and Republicans in the House and the Senate will be able to vote on and agree on.”
Representative Garret Graves, one of the House Republican negotiators, said Tuesday there were still “significant gaps” between the two parties.
Some information for this report came from The Associated Press, Reuters and Agence France-Presse.