Debt-ceiling talks between White House and congressional aides are set to intensify as negotiators seek a framework agreement for Joe Biden and House Speaker Kevin McCarthy to review upon the president’s return from a truncated trip to Asia.
The latest round of talks, launched before Biden’s departure Wednesday for a Group of Seven meeting in Hiroshima, Japan, will feature a narrower group of negotiators in hopes of yielding a deal to avert an unprecedented US default.
Biden said he would call lawmakers and staff to remain apprised of the negotiations during his time abroad, and hopes to gather with congressional leaders once he is back in the country next week. The president intended to visit Australia and Papua New Guinea, but scrapped those stops in hopes of brokering an agreement.
The president and lawmakers struck a cautiously optimistic tone following a meeting Tuesday, saying that while the two sides remained far apart, they were hopeful the new negotiating teams could find bipartisan middle ground. The Treasury Department is warning that the nation faces the disastrous prospect of default as soon as June 1.
McCarthy on Wednesday said that, at the end of the day, “we do not have a debt default.” He also said on CNBC that narrowing the number of negotiators was helpful.
Financial markets on Wednesday showed hints of optimism as the talks continue, with US stock futures higher and the dollar — seen as a haven at times of stress — lower.
The hope on competing ends of Pennsylvania Avenue is that the two sides can avoid calamity by delegating responsibility to a smaller group — many of whom are known as negotiators able to strike deals. Senior White House adviser Steve Ricchetti, legislative affairs director Louisa Terrell and budget director Shalanda Young will represent Democrats in staff-level negotiations, while Representative Garret Graves of Louisiana as well as aides to the speaker will join from the Republican side.
“There was an overwhelming consensus, I think, among the congressional leaders that defaulting on the debt is simply not an option,” Biden said in remarks following the meeting. But the president cautioned, “there’s still work to do.”
McCarthy has agitated for narrower talks in recent days, and said Tuesday a deal could come together quickly.
“We’ve got a lot of work to do,” McCarthy told reporters. “It is possible to get a deal by the end of the week. It’s not that difficult to get to an agreement.”
Senate Majority Leader Chuck Schumer said he was more optimistic than he had been last week, while House Minority Leader Hakeem Jeffries praised an “open, honest, and cordial discussion.”
“The bottom line is that we all came to agreement that we were going to continue discussions,” Schumer said.
Meantime, top Democratic officials plan meetings with banking executives, part of a broader effort to showcase the danger to the economic and financial outlook of any failure to address the debt limit. Schumer will gather Wednesday at 11 a.m. with the heads of JPMorgan Chase & Co., Citigroup Inc. and other banks, according to a person familiar, while Treasury Secretary Janet Yellen is also set to meet with members of a top banking lobby this week.
Sizable obstacles remain for the two sides to raise the federal spending limit. Failure to reach a deal will likely push the US over its debt ceiling as soon as next month, triggering a default that could rock global financial markets, raise borrowing costs for the government, companies and consumers and imperil an economic expansion that’s already begun to show signs of weakening.
Australian Prime Minister Anthony Albanese, who Biden called Tuesday to cancel his visit, said the American president expressed frustration with Republican lawmakers.
