Jim Small /Arizona Mirror

Biden and McCarthy Hold ‘Productive’ and ‘Frank’ Debt Limit Talks as Fiscal Cliffs Loom

“I thought this was a very productive conversation,” the Speaker of the House said.

WASHINGTON — President Joe Biden and U.S. House Speaker Kevin McCarthy huddled behind closed doors at the White House on Wednesday in the first of what will likely be several conversations as the country approaches two fiscal cliffs this year amid divided government. 

The top issue at the moment is when and how to address the nation’s borrowing ceiling, known as the debt limit, ahead of an expected summer deadline. 

Biden has remained adamant he won’t negotiate with Republicans on the debt ceiling and that talks about government spending need to move on a separate track.

But the two issues are linked for McCarthy and many in the Republican Party, who want to see an agreement about spending cuts before they vote to address the debt limit, which provides borrowing authority for spending Congress already approved. 

“I was very clear that we’re not passing a clean debt ceiling. We’re not spending more next year than we spent this year,” McCarthy told reporters following the meeting, linking the two separate issues of debt limit and government spending. 

‘Productive conversation’

McCarthy said he would like to get to a place where House Republicans and Democrats, who control the Senate and the White House, know what they’re going to spend during the next two fiscal years. 

McCarthy said he didn’t want to give any “misimpression” on the meeting with Biden, which lasted a little over an hour, but said the talk was better than he thought it was going to be. 

“I thought this was a very productive conversation,” McCarthy said. “Now, you know, in all these different things, if you had a productive conversation, and you both walked out saying, ‘Let’s continue it,’ that’s a positive for today.”

Biden called McCarthy “a decent man” during a fundraising event Tuesday evening in New York City, though he questioned the deals McCarthy struck to hold the speaker’s gavel. There were 15 ballots before McCarthy was elected.

“Look what he had to do,” Biden said. “He had to make commitments that are just absolutely off the wall for a speaker of the House to make in terms of being able to become the leader.”

A White House “readout” of the meeting said Biden and McCarthy “had a frank and straightforward dialogue.”

“The President welcomes a separate discussion with congressional leaders about how to reduce the deficit and control the national debt while continuing to grow the economy. This conversation should build on the President’s leadership in delivering a record $1.7 trillion in deficit reduction in his first two years in office.”

Schumer calls for GOP plan

Senate Majority Leader Chuck Schumer, a New York Democrat, said Wednesday morning that House Republicans were “struggling to grasp a harsh reality about being in the majority — there is no good substitute for having a plan.”

“This is especially true when it comes to the debt ceiling,” Schumer said. “For days, Speaker McCarthy has heralded this sit down as some kind of major win in his debt ceiling talks, but Speaker McCarthy is forgetting something obvious to everyone else; if you don’t have a plan, you can’t seriously pretend you’re having any real negotiation.”

Schumer said Democrats’ plan is to “raise the debt ceiling without brinkmanship or hostage taking, as it’s been done before.”

Schumer’s comments came around the same time House Republicans were huddled behind closed doors in the basement of the U.S. Capitol building, trying to hash out their plans for the debt limit and possible negotiations with Democrats. 

House Budget Chair Jodey Arrington said following the meeting he believes McCarthy was taking more specifics to Biden than he was willing to discuss publicly and that the invite represented a win for Republicans. 

“I think the first objective was to make sure that we got our Democratic colleagues to the table to have a conversation about responsibly raising the debt limit,” Arrington said. 

The Texas Republican said it would be irresponsible and reckless “to just blow by this opportunity and have a clean debt ceiling raised without any consideration for reducing spending or other fiscal reforms.” 

“That’s been his position. That’s been my position,” Arrington said. “And I think we can already say that we have one step of success and one step in the right direction because the president is having the conversation with the speaker.”

Extraordinary measures employed

The U.S. reached its debt limit of $31.385 trillion in mid-January, after which the Treasury Department has been using accounting maneuvers called extraordinary measures to keep paying all the country’s bills in full and on time. 

Secretary Janet Yellen expects that authority will run out sometime this summer, though not before early June, giving Congress and the Biden administration time to pass legislation addressing the debt limit. 

Senate Minority Leader Mitch McConnell, a Kentucky Republican, reiterated Tuesday that it’s up to McCarthy and Biden to broker a debt limit agreement this time around. 

“I think a deal has to be cut, obviously, between the House majority and the Democratic president in order to have a chance to survive over here,” McConnell said. “We’re all behind Kevin and wishing him well in negotiations.”

While McConnell has mostly bowed out of talks over the debt limit, 24 of his members sent a letter to Biden last week to voice support for pairing “structural spending reform that reduces deficit spending” with legislation to suspend the debt limit. 

Tennessee Sen. Marsha Blackburn, Indiana Sen. Mike Braun, Alabama Sen. Katie Britt, North Carolina Sen. Ted Budd, Idaho Sen. Mike Crapo, Iowa Sen. Joni Ernst, Nebraska Sen. Deb Fischer, Wisconsin Sen. Ron Johnson, Oklahoma Sen. James Lankford, Kansas Sen. Roger Marshall, Kentucky Sen. Rand Paul, Nebraska Sen. Pete Ricketts, Idaho Sen. James Risch, Florida Sen. Rick Scott, Missouri Sen. Eric Schmitt, Alabama Sen. Tommy Tuberville and Ohio Sen. J.D. Vance were among the Senate Republicans who signed the letter. 

Speaking from the Senate floor on Wednesday morning, McConnell said it is “right, appropriate and entirely normal that our need to raise the debt limit would be paired with negotiations around” government spending.

Budget resolution

Florida Rep. Byron Donalds said Wednesday morning after the House GOP’s closed-door meeting that it’s “possible” the party puts forward its full proposal for the debt limit in the fiscal year 2024 budget resolution that will likely be released in April. 

That tax and spending blueprint, which moves as a concurrent resolution and not a bill, will need to include House Republicans’ plans for defense spending, a topic Donalds said the party hasn’t really talked about yet. Several high-ranking Republicans, however, have said the party won’t move to reduce defense spending.

Donalds also said it would be challenging to try to balance the budget resolution by cutting just domestic discretionary spending. 

“It makes it difficult. You’re gonna have to have some of the things in there, like growth projections,” Donalds said. “What are we going to do on tax policy over the next decade because the Tax Cuts and Jobs Act is going to start to expire, which is something we should address.”

Discretionary spending funds the vast majority of federal departments and agencies annually, including the departments of Agriculture, Defense, Energy, Homeland Security and Veterans Affairs. 

While Republicans have taken cuts to Medicare and Social Security off the table, Donalds said, it wasn’t clear if they’d move to change the structure of Medicaid, the health care program for low-income people and people with disabilities.

Those three programs mostly run on autopilot, meaning payments and increases to the total amount of funding they require happen unless Congress intervenes. 

Oklahoma Rep. Tom Cole, chair of the Rules Committee, said the House GOP huddle on Wednesday morning was a “really good educational meeting.”

Cole, who is also chair of the Appropriations subcommittee that funds the departments of Transportation as well as Housing and Urban Development, said he expects House Republicans will move to hold down discretionary spending during the next fiscal year. 

“I suspect we’ll put the brakes on discretionary spending,” Cole said. “Probably, worst case scenario, from a Republican’s standpoint, you’d end up in a CR, so it’s not going to go up. It’s going to stay where it’s at. So we’re going to make progress.”

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