President Biden and the top Republican and Democratic congressional leaders wrapped up a meeting at the White House on Tuesday without a deal to raise the debt limit, keeping the country on track default on its debts as soon as June 1.
The president will shorten a coming overseas trip and return home sooner than planned to settle the matter. Biden has instructed staff to meet daily on outstanding issues, and he will check in by phone this week while he travels and meet with leaders again when he returns, the White House said after the meeting.
House Speaker Kevin McCarthy told reporters that the two sides remained far apart over the path forward. But he added that a deal is still possible by the end of the week.
“It’s unfortunate that we are where we are,” McCarthy said. “It isn’t that difficult to get to an agreement.”
Biden agreed to appoint a point person on negotiations with Congress in Tuesday’s meeting, McCarthy said, a move he suggested would push the two sides closer to a deal because “the structure of how we negotiate has improved.”
In separate remarks to reporters, Senate Majority Leader Chuck Schumer declined to give details on what future talks would look like but acknowledged that “there will be a few additional players” included in the negotiation process.
The latest White House meeting comes with two weeks left before the U.S. is at serious risk of defaulting on its debt, an unprecedented situation that would wreak financial havoc and leave the country unable to pay its bills. Treasury Secretary Janet Yellen reiterated earlier Tuesday that June 1 appears to be the deadline by which the country will run out of funding to continue business as usual.
The window in which negotiators will be able to forge a deal, pass it through both the Senate and House of Representatives, and send it to Biden’s desk for his signature has been accelerated further, however, because of presidential travel plans and Congress’ shortened schedule ahead of the Memorial Day Weekend holiday.
Biden will depart on Wednesday for a trip to Japan for a G-7 meeting, and he had initially planned to visit Australia and Papua New Guinea after the meeting. The White House said Biden would return to the U.S. after the meeting in Japan to wrap up negotiations.
None of the so-called Big Four congressional leaders who spoke after the Tuesday meeting—a group that includes McCarthy, Schumer, House Minority Leader Hakeem Jeffries, and Senate Minority Leader Mitch McConnell—offered details on what policy options are on the table as the two sides attempt to find a path forward.
Leaders from both sides of the aisle emphasized multiple times that default wasn’t an option and projected optimism that it would be avoided. Schumer said the discussions were much more cordial than recent meetings, and that officials had “honest and real discussions” about policy differences on a variety of issues.
Everyone in the meeting also agreed that any final agreement would have to garner bipartisan support in both chambers, Schumer said.
“What gave me the most hope is that everyone, including the Speaker, agreed that we have to be bipartisan,” Schumer said. “Everyone freely admitted that in the room.”
Still, significant policy differences remain. Republicans would like to see spending cuts and longer-term spending caps than Democrats would agree to, and Democrats are resistant to any attempts to roll back aspects of the Inflation Reduction Act passed last year.
GOP lawmakers have also pressed to include work requirements for some federal aid programs, such as the Supplemental Nutrition Assistance Program, that help the poorest families. Biden appeared to offer mild support for that idea over the weekend, but the White House later walked back his comments and prominent Democrats have pushed back forcefully on the idea that any such requirements would be included as part of a debt-ceiling deal.
There could be room for agreement over rescinding some of the unspent Covid aid—money that was passed earlier in Biden’s term that hasn’t been used—and locking in spending at current levels for a year or two. Negotiators could also include provisions on energy permitting reform that both sides might find reason to like.
If a resolution remains elusive as negotiators get closer to the deadline, officials could also work to find a short-term measure to lift the debt ceiling until the fall, at which point Congress will be working to pass an appropriations bill to fund the government. Some analysts see a short-term extension as the most likely outcome largely because the time remaining to reach a deal is so short.
But it all remains up in the air as talks continue. “Nothing has been resolved in this negotiation,” McCarthy said Tuesday, after he had returned to the Capitol.
Write to Megan Cassella at megan.cassella@dowjones.com and Brian Swint at brian.swint@barrons.com
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