After about an hour of talks in the Oval Office, Biden, a Democrat, and Kevin McCarthy, the Republican Speaker of the House of Representatives, tasked aides with daily talks on a possible deal as the possibility of a default looms. June 1.
Biden, McCarthy and other senior congressional leaders are scheduled to meet again on Friday.
Biden called the talks “productive” and appeared to offer Republicans some possible concessions, including “looking closely” for the first time at recovering unspent coronavirus relief funds to reduce government spending.
But he stressed that Republicans needed to put aside the default crisis and ultimately did not rule out returning to the 14th Amendment to the US Constitution, an untested approach that would seek to declare the debt limit unconstitutional. He said that would require prosecution, but it was an option he might consider in the future.
“There’s a lot of politics and posturing, and it’s going to be for a while,” Biden said. “Everyone present at the meeting understood the risk of default,” he added.
McCarthy pointed to the lack of progress after the meeting. “I haven’t seen any new moves,” he told reporters, adding that Biden hadn’t agreed to talks until time expired. “That’s no way to govern,” he said.
But he said Biden has indicated he is open to discussing reforms to the permitting process for new energy projects as part of the talks.
Economists have warned that a long period of default could send the US economy into a deep recession with high unemployment rates and then destabilize a global financial system that relies on US bonds. Investors are bracing for the impact.
Biden is calling on lawmakers to unconditionally increase the federal government’s self-imposed borrowing limit.
McCarthy, whose party has a narrow majority in the House of Representatives, said his House would not approve any deal that did not cut spending significantly to deal with the growing budget deficit and indicated that he would not saw no short-term solution.
Previous debt ceiling battles typically ended in a hastily arranged deal in the final hours of negotiations, avoiding default.
In 2011, this led to a historic downgrade of the country’s prime credit rating. Veterans of that battle warn that the current situation is more dangerous given growing political divisions.
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