Biden, McCarthy Move Towards US Debt Ceiling Deal

WASHINGTON, May 17 (Reuters) – President Joe Biden and the top Republican in the U.S. Congress, Kevin McCarthy, have underscored their commitment to reaching a deal soon to raise the federal government’s $31.4 trillion debt ceiling and avoid economic disaster.

After a month-long stalemate, the Democratic leader and the House Speaker agreed on Tuesday to negotiate a deal directly. On June 1, a deal must be reached and passed by both houses of Congress before the federal government runs out of money to pay its bills.

“We’re going to get together because there’s no other way,” Biden told reporters at the White House, where he will return to Washington on Sunday after a trip to Asia, but staff-level discussions will continue in Washington.

“To be clear, this negotiation is about the contours of the budget, not about whether or not we’re going to (pay off our debts),” Biden said. “The leaders (of Congress) have all agreed: We will not make mistakes. Every leader has said that.”

Republicans, who control the House by a 222-213 majority, have been pushing for months for Democrats to agree to spending cuts in exchange for a deal to raise Congress’ self-imposed debt ceiling. The cap should continue to be lifted as the government spends more than it taxes.

Asked by reporters at the Capitol if a debt ceiling deal could be reached by the time Biden returns from Asia on Sunday, McCarthy replied, “It’s doable.”

“We’re on a tight timeline,” McCarthy said. “It almost makes it harder. But you know one thing, for me, I never give up. I have determination and perseverance and we’re going to get it done.”

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The two-way dialogue streamlines the previous five-way format last week, which also included three other senior Congress leaders.

Biden left Wednesday for the Group of Seven summit of world leaders in Hiroshima, Japan, from Friday to Sunday.

On Tuesday, Biden and McCarthy met for about an hour at the White House with Senate Majority Leader Chuck Schumer, Senate Republican Leader Mitch McConnell and House Democratic Leader Hakeem Jeffries.

A White House official said Biden plans a news conference in Hiroshima on Sunday before returning to Washington.

Financial markets appeared buoyed by those discussions, with U.S. stocks rising on Wednesday, fueled by cautious optimism among investors as the talks continued.

The U.S. Treasury has said it could run out of funds to pay the government’s bills as early as June 1 — a move economists say could trigger a recession.

Negotiators are aiming to hammer out a deal before Biden returns to Washington on Sunday. Congress must act quickly before the June 1 deadline.

McCarthy said the House would vote first on any deal before sending it to the Senate, which Biden’s Democrats control by a 51-49 margin. Senate rules require at least nine Republicans to be included in any deal.

Job requirements

Negotiations continue over the life of any contract, work requirements for aid programs for the poor, including food subsidies and spending caps.

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The job demand discussions have focused on the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, and the Temporary Assistance for Needy Families program, according to sources briefed on the negotiations, who spoke on condition of anonymity to disclose details about the closure. Door negotiations. Biden has previously said he would not be open to discussions about work requirements for Medicare for low-income Americans.

He told reporters on Wednesday that he would not accept any job requirement changes that would affect the health needs of recipients.

“There may be a few … but nothing of consequence,” he said.

McCarthy backed conservatives’ call for job requirements in a CNBC interview, saying they would help the economy and boost the workforce, and promised to avoid any discussion of taxes.

Raising taxes on the wealthy and corporations to pay for programs for other Americans is a key part of Biden’s 2024 budget, and the president said Tuesday that Republicans won’t consider ways to raise revenue.

In a statement, Jeffries said he hoped a bipartisan deal could be reached, but that House Democrats would file a “discharge petition” if they had to bypass regular chamber procedures to work on the debt ceiling and avoid default.

Report by Susan Heavey; Editing by Andrew Heavens

Our Standards: Thomson Reuters Trust Principles.

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