Joe Biden to meet Kevin McCarthy to thrash out debt ceiling deal

US President to meet with Republican House Speaker to help thrash out an acceptable deal for both parties, following a ‘productive’ phone call.

Joe Biden, right, and House Speaker Kevin McCarthy, left, will meet for more talks on defusing the US debt ceiling standoff. The President told reporters ‘much of what they’ve already proposed is simply, quite frankly, unacceptable’. Picture: AFP

Public pressure is mounting on president Joe Biden to cut a deal with Republicans that includes significant federal government spending cuts to avoid a potentially catastrophic US government default as soon as 1st June.

Mr Biden, en route to Washington from the G7 summit in Japan, arranged to meet House Republican Speaker Kevin McCarthy once again on Monday (Tuesday AEST) in Washington to help thrash out a deal acceptable to both parties after a phone call Mr McCarthy later described as “productive”.

The president cancelled a planned trip to Australia and Papua New Guinea especially to return to Washington to ensure a successful resolution to the weeks long debt ceiling impasse, telling reporters in Japan he “could not guarantee that they will not force a default by doing something outrageous”.

“It’s time for Republicans to accept that there is no bipartisan deal to be made solely—solely—on their partisan terms,” Mr Biden said before boarding Air Force One.

“They have to move as well,” he added, suggesting the White House has already made concessions that Republicans had rejected.

So much of what Congressional Republicans have proposed during budget negotiations is simply unacceptable.

It’s time for them to move off their extreme position and act to avoid default. pic.twitter.com/cg7sV9k7Es

— President Biden (@POTUS) May 21, 2023

Since negotiations over the debt ceiling formally began earlier this month, Democrats have insisted the debt ceiling be lifted without conditions, undertaking only to negotiate overspending levels sometime in the future.

Republicans, who won control of the House of Representatives in November’s midterm elections, have insisted on a reduction in annual spending to 2022 levels, ahead of annual increases of 1 per cent thereafter – cuts that Democrats say would “harm” Americans.

“I do not think it’s extreme that we simply say we should spend less than we spent this year,” Mr McCarthy told Fox News on Sunday, referring to Mr Biden’s characterisation of the Republican plans as “extreme” at a press conference in Japan.

Just got off the phone with the president while he’s out of the country.

My position has not changed. Washington cannot continue to spend money we do not have at the expense of children and grandchildren.

Tomorrow, he and I will meet in person to continue negotiations.

— Kevin McCarthy (@SpeakerMcCarthy) May 21, 2023

“Much of what they’ve already proposed is simply, quite frankly, unacceptable,” the president had told reporters.

The bulk of Americans expect the White House to agree to spending cuts as part of a deal to lift the $47.47 trillion debt ceiling, which increased frequently and in total by almost $30 trillion over the last 20 years owing to annual, massive budget deficits, especially during the Covid-19 pandemic.

Most voters appear to support the GOP position according to a Harvard-Harris poll of more than 2,000 Americans conducted last week, which found at least 60 per cent of voters wanted Democrats to agree to spending cuts as part of any debt ceiling increase.

Between 62 and 65 per cent said spending cuts and limits on future spending would “help the health of the US government”, and 57 per cent said Democrats should “cave their position” to avoid default, which economists say could prompt a global recession and sharp sell-off in the stock market.

I literally asked the president: "What is the number? How much debt must America have before you say, 'let's stop borrowing from China?'" pic.twitter.com/nAd1wMtDOw

— Kevin McCarthy (@SpeakerMcCarthy) May 21, 2023

Most Americans blamed ‘Tea party’ Republicans for the 2013 fiscal impasse that saw the Obama administration ‘shutdown’ for 17 days in October, the last major fiscal dispute that tested US fiscal credibility.

Separately, US Treasury Secretary Janet Yellen wouldn’t specify which government obligations would go unmet in the event the US ran out of funds – the exact timing of which remains unknown given the routine uncertainty surrounding receipts and expenses.

She also pushed back against the idea the president could ignore the debt ceiling, by resorting to part of the 14th amendment of the US constitution, which states “the public debt shall not be questioned”, something Mr Biden himself had canvassed publicly.

“It doesn’t seem like something that could be appropriately used in these circumstances, given the legal uncertainty around it, and given the tight time frame we’re on,” she told Meet the Press on Sunday.

Since January, when the Mr McCarthy was embroiled in fraught negotiations with factions within his own party to secure enough votes to become Speaker, his net approval rating has climbed from -5 to 10, according to national polling by YouGov/The Economist.