(Bloomberg) — President Joe Biden directed his aides to schedule a call on Sunday with House Speaker Kevin McCarthy, after the top Republican accused the White House of backtracking in talks on raising the US debt limit.
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Biden received updates on the stalled negotiations Saturday night and Sunday morning in Japan, where he is attending the Group of Seven leaders summit, according to a White House official. The president is seeking to call the speaker Sunday morning, Washington time, after the summit concludes.
McCarthy on Saturday said that the impasse was unlikely to be resolved while the president was still overseas.
“I don’t think we’re going to be able to move forward until the president can get back into the country,” McCarthy told reporters at the Capitol. “Just from the last day to today they’ve moved backwards. They actually want to spend more money than we spend this year.”
McCarthy’s comments confirmed a renewed shift in tone to mutual recrimination as the White House suggested that Republicans were negotiating in bad faith and said a GOP budget proposal presented Friday was a step back. With talks stalled, the clock is ticking after Treasury Secretary Janet Yellen said the US could lose the ability to pay all its bills by June 1.
Biden Team’s Response
Republicans and the White House are battling over spending cuts, which GOP lawmakers demand as the price for raising the federal borrowing limit. Lawmakers are stepping up attacks on each other despite showing signs of progress earlier in the week.
“We have to spend less than we spend this year,” McCarthy said, repeating his bottom-line demand.
Republicans rejected a White House proposal that would have kept both non-defense and defense discretionary spending flat next year compared with the 2023 fiscal year, according to two people familiar with the talks. McCarthy has said he wants spending cuts from the previous year for non-defense spending, while Democrats argue that keeping appropriations flat amounts to an effective cut because of inflation.
Republicans have also said that in addition to the cuts, they want an increase in the Pentagon’s budget. That has met resistance from the White House, which believes the two combined demands would mean that domestic priorities such as health care and education programs would be slashed even further.
Disputes over changes to the tax code have also made their way into the talks. Democrats have continued to pitch for closing certain loopholes benefiting fossil-fuel and pharmaceutical companies, as well as cryptocurrency traders.
Republicans have rejected any proposals that would raise tax rates, while urging the renewal of Trump-era tax cuts set to expire as soon as 2025.
Republicans provided an offer of their own on Friday night, White House Press Secretary Karine Jean-Pierre said. But she characterized the package as containing “a set of extreme partisan demands that could never pass both Houses of Congress.”
The GOP offer was a “big step back,” Jean-Pierre said in a statement, adding that Republican leaders appeared “beholden to its MAGA wing.”
Read more: Debt-Limit Deal Will Likely Come Only After Battle to the Brink
Biden signaled earlier Saturday he remains confident the US government can avoid a catastrophic default.
For a deal to succeed, cuts must be significant enough to pacify conservative Republicans, who have backed McCarthy’s speakership on the condition that he extract serious spending reforms without raising taxes or slashing military spending and veterans benefits.
But a plan also has to be palatable to Democrats, who hold a Senate majority and will likely need to provide between 50 and 100 votes in the House. Few in the president’s party want to see domestic programs cut, especially without corresponding cuts to the Pentagon budget or the closing of tax loopholes used by the wealthy and large corporations.
The desire to wait for Biden may be informed by a Republican belief that the president will ultimately decide to sacrifice progressive priorities to defuse the biggest threat to the economy ahead of his reelection campaign. The president has already de-facto retreated from his pledge not to negotiate over raising the debt ceiling.
The debt-limit fight, which could trigger a first-ever US payments default, threatens to inflict pain on the global economy. It has shadowed Biden’s overseas trip and the president previously decided to cut his travels short in order to return to Washington for the final stages of negotiation.
Earlier: US Debt-Limit Meetings Hold, McCarthy Says Talks Are ‘So-So’
A Republican walk-out of talks Friday in Washington shattered hopes that negotiators were nearing a deal to raise the borrowing cap, sending stocks sliding.
McCarthy had hoped to at least forge an agreement on an outline for a deal this weekend to tee up a House floor vote on legislation next week.
The Senate has left Washington for their Memorial Day recess, but senators have been told to be prepared to return on 24-hours notice if needed.
Biden will meet with Ukrainian President Volodymyr Zelenskiy during the G-7 on Sunday, according to the White House. He’s scheduled to return to Washington late Sunday, Japan time.
–With assistance from Justin Sink and Kailey Leinz.
(Retops with Biden’s efforts to call McCarthy)
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