Biden, McCarthy seek ‘common ground’ in talks over US debt ceiling

US House Speaker Kevin McCarthy speaks to members of the media after a meeting with US President Joe Biden at the White House on Feb 1, 2023. PHOTO: BLOOMBERG

WASHINGTON - US President Joe Biden and Republican House Speaker Kevin McCarthy held initial talks on Wednesday about raising US government borrowing limits in a first test of how the two will work together, with both sides agreeing to talk more.

The White House said after the meeting that Mr Biden told Mr McCarthy he was eager to work with Republicans “in good faith”. Mr McCarthy said the two men could find common ground. But, as expected, there was no sign of an immediate breakthrough.

“The President and I had a good first meeting,” Mr McCarthy told reporters after the meeting, which lasted more than an hour. He said the two men shared their perspectives with each other. “I can see where we can find common ground.”

The Democratic President and Republicans, who won control of the US House of Representatives in November’s elections, are locked in a stand-off over raising the federal government’s US$31.4 trillion (S$40.98 trillion) US debt ceiling.

“President Biden made clear that, as every other leader in both parties in Congress has affirmed, it is their shared duty not to allow an unprecedented and economically catastrophic default,” the White House said in a statement. “It is not negotiable or conditional.”

The Oval Office talks may serve as the opening bell for months of back-and-forth manoeuvring. Neither side expects a solution to emerge from a single meeting. Without action, the government could lose its ability to pay all its bills as early as June.

Mr McCarthy was optimistic that such a scenario could be avoided. “I believe if we’re able to get to an agreement, we could have a funding agreement for the next two years. You’ll see the Senate and the House actually do the job the American public has elected us to do,” he said.

Mr Biden has said he wanted to see Mr McCarthy’s budget plan. “Show me his budget!” he told reporters on Tuesday when asked if he would negotiate with the House leader.

The White House said Mr Biden was open to talks about deficit reduction untethered to the debt ceiling debate. “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,” it said.

House Republicans want to use the debt ceiling as leverage to exact cuts, though they have yet to unite around a specific plan. The increase covers the costs of spending programmes and tax cuts previously approved by Congress, and is usually approved on a bipartisan basis.

The 80-year-old President, a long-time former senator who served as vice-president during a similar 2011 showdown that led to a historic downgrade of the federal government’s credit rating, enters the talks with what some of his aides believe is a strong hand that includes a narrow Senate majority, a party that is unified on this issue and a strong message for voters.

Mr McCarthy, 58, Speaker for less than a month, leads a fractious House Republican caucus with a narrow 222-212 majority that has given a small group of hardline conservatives outsized influence.

Despite years of mingling with other Washington lawmakers, Mr Biden has little personal history with Mr McCarthy, who joined the Republican leadership on Capitol Hill under former Speaker John Boehner after Mr Biden left to become Mr Barack Obama’s vice-president.

Just one in four Republicans serving in the House today held their seats in 2011 and some may not be fully aware of the risks of courting default, or the difficulties of negotiating in a divided government.

Unlike most other developed countries, the United States puts a hard limit on how much it can borrow and Congress must periodically raise that cap because the US government spends more than it takes in.

Minutes before the White House meeting, Federal Reserve chair Jerome Powell told reporters: “There is only one way forward here and that’s for Congress to raise the debt ceiling. No one should assume that the Fed can protect the economy from the consequences of failing to act in a timely manner.”

The 2011 crisis was resolved with a bipartisan deal that cut spending and raised the debt limit but left Obama administration officials smarting. Many felt they had given up too much and had still harmed the economy by letting talks persist.

Mr McCarthy has less room to manoeuvre than his Republican counterpart in 2011 did.

To win the Speaker’s gavel, he agreed to enable any single member to call for a vote to unseat him, which could lead to his ouster if he seeks to work with Democrats. He also placed three hardline conservatives on the Rules Committee, which would allow them to block any vote on a compromise.

Mr Biden seemed to question Mr McCarthy’s ability to keep Republicans in line at a fund-raiser in New York on Tuesday, calling him “a decent man, I think” but noting the concessions he made to become Speaker.

Mr McCarthy, on his part, said Mr Biden needed to be willing to make concessions to get a debt-ceiling increase through Congress, saying it would be “irresponsible” not to negotiate. REUTERS

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