McCarthy: Debt ceiling meeting with Biden ‘productive’ but no agreement yet

Speaker Kevin McCarthy (R-Calif.) emerged Monday evening from a roughly hourlong meeting with President Biden on the debt ceiling saying the latest conversation was “productive,” but that the two sides still don’t have an agreement on how to avoid default just days until the deadline.

“I felt we had a productive discussion. We don’t have an agreement yet,” McCarthy told reporters after the Oval Office meeting.

McCarthy said he believed the tone of the meeting was “better than any other time we’ve had discussions.” The Speaker also praised the negotiators Biden appointed to work on a deal, calling them “intelligent,” “professional” and “respectful.”

Speaking to reporters back at the Capitol after the meeting, McCarthy said negotiators are “getting closer” to a deal.

“Don’t give up on us,” he said.

But there are still clear philosophical differences that the two sides must overcome.

Biden, for example, has argued reforming the tax system to account for government revenue should be on the table in negotiations. The president said at the start of Monday’s meeting that the two sides should be looking at closing tax loopholes and ensuring wealthy Americans pay “their fair share.”

But tax increases are one of the Speaker’s red line. McCarthy said after Monday’s meeting that “the problem is not revenue, the problem is spending.” The Speaker also ruled out defense cuts as part of any final package.

Asked if there were any areas of agreement, McCarthy reiterated that the talks were productive but did not immediately detail specific common ground.

“I think we both agree we want to be able to come to an agreement,” he said. “We both agree on the areas that we know there’s disagreement on.”

But after the meeting, McCarthy said that he and the president found some agreement on streamlining the permitting process for energy projects, one area of potential compromise in negotiations. 

“The president [and] I both agreed that you can’t do permitting reform for one form of energy. It has to be for all the above,” McCarthy told reporters.

In a statement issued roughly an hour after the meeting, Biden also called the meeting “productive.”

“We reiterated once again that default is off the table, and the only way to move forward is in good faith toward a bipartisan agreement,” Biden said. “While there are areas of disagreement, the Speaker and I, and his lead negotiators Chairman McHenry and Congressman Graves, and our staffs will continue to discuss the path forward.”

Rep. Patrick McHenry (R-N.C.), who also attended the White House meeting and has been in negotiations with administration officials in recent days, said the conversation between McCarthy and Biden provided clarity for ongoing talks.

“It told us, as the negotiating team, a little more of the details we need to get to a package — a package that can pass Congress,” he said.

But back at the Capitol, McHenry warned there is a “lack of urgency” on the part of the White House.

“I’m worried about the impacts on the markets,” said McHenry, the House Financial Services Committee chairman. “I think to play brinkmanship is not wise, when it comes to where we are with the banking system with the economy.”

With a June 1 debt limit deadline fast approaching and few signs of an imminent deal, the pressure is high on House Republicans and the White House to raise the debt ceiling — and eliminate the threat of economic turmoil if the U.S. cannot pay its bills.

Monday’s meeting came after a roller coaster few days in negotiations, which saw both Biden and McCarthy project optimism late last week only for talks to falter over the weekend. The two leaders spoke on the phone Sunday as Biden was traveling back from the Group of Seven Summit in Japan.

McCarthy told reporters Monday that his worries about a potential downgrade of the U.S. credit rating were why he asked Biden to start negotiating on the debt limit in February.

“I’m concerned that he never worried about that,” McCarthy said of Biden.

McCarthy said shortly before Monday’s meeting that he still believed an agreement was possible in time to avert a default. But he has been adamant that such a deal must be struck soon so it can be voted on in the House, sent to the Senate and approved there before heading to the White House for Biden’s signature.

The White House and McCarthy have both acknowledged that any deal must be bipartisan because of the narrow Republican majority in the House and the tight Democratic majority in the Senate.

In a letter to congressional leaders Monday, Treasury Department Secretary Janet Yellen warned it was “highly likely” the U.S. will not be able to pay all of its debts if lawmakers do not act by early June, and “potentially as early as June 1.”

Officials have for weeks cautioned that if the U.S. were to default, or even come close to it, it would have severe economic consequences and potentially trigger a recession.

McCarthy told reporters Monday that something has to get done on the debt bill by the end of the week in order to meet that deadline. And McHenry similarly told reporters that an agreement is needed within the next day or so.

“We all understand deadlines. We understand the process,” McHenry said. “We have the physical process of actually writing it — the mechanical piece is real. We have to be cognizant of the reality of moving paper, and ensuring that’s accurate and correct.”

McCarthy told reporters it is possible he keeps lawmakers in town during a previously scheduled recess in order to pass a debt deal bill.

Updated 9:02 p.m.