May 22, 2023 - Politics & Policy

Debt ceiling talks enter make-or-break phase

biden and mccarthy

Photo: Drew Angerer/Getty Images

Ahead of their debt ceiling meeting Monday afternoon, neither President Biden nor House Speaker Kevin McCarthy (R-Calif.) know whether the other side is willing to compromise at the 11th hour.

Why it matters: Treasury Secretary Janet Yellen repeated her warnings Sunday — which she had made in public and in private – that June 1 is a “hard deadline” to raise the debt ceiling.

  • While Biden is keeping the 14th Amendment as a viable option, he made it clear in Japan that it’s not his preferred course of action, citing the certain legal challenges.

Driving the news: After on-again-off-again talks over the last 72 hours, Biden and McCarthy spoke Sunday when the president was flying home from Japan. Their top negotiators reconvened Sunday night.

  • McCarthy described his call with Biden as “productive” but he wasn’t overly optimistic. “There’s no agreement,” he told reporters Sunday on Capitol Hill. “We’re still apart.”
  • Before their Air Force One call, accusations — and doubts about a deal — filled the airspace.
  • "I'm hoping that Speaker McCarthy is just waiting to negotiate with me when I get home, " Biden said before leaving Japan where he attended a G-7 summit, “I don't know whether that's true or not.”
  • At his closing press conference, Biden demanded that Republicans move off their “extreme positions.”
  • McCarthy was quick to counter on Fox News. “I do not think it’s extreme that we simply say we should spend less than we spent this year."

What we’re watching: McCarthy’s point man – Rep. Garret Graves (R-La.) – says top line spending levels are the key to a potential deal.

  • Republicans are insisting on spending less money in FY 2024 than FY 2023, with Graves calling it a “red line.”
  • The White House has proposed keeping spending between this year and next year flat, but they want the Pentagon to share some of those cuts.
  • Biden seems pretty far from accepting the GOP's spending cuts.

Go deeper: Even if the two leaders reach an agreement early this week, they'll still face a difficult — and shared — problem of shepherding it through the House.

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