Debt ceiling talks between Joe Biden and the House speaker, Kevin McCarthy, dragged on Wednesday, as negotiators met again to hash out the details of a potential deal.
“There’s a number of places that we’re still far apart,” McCarthy told reporters on Capitol Hill. “I think we can make progress today. I’m hoping that we can.”
McCarthy said his advisers would meet with Biden administration officials at the White House on Wednesday afternoon to “try to finish out the negotiations”, with eight days left to avoid a federal default.
Accusing Biden of acquiescing to the “extreme” wing of his party, McCarthy reiterated that he would not support a “clean” bill raising the debt ceiling without cutting government spending. The White House has pushed for reducing the federal deficit by increasing taxes on large corporations and the wealthiest Americans, but McCarthy rejected that proposal, insisting that the negotiations must focus on the spending side.
“We have to spend less than we spent last year,” McCarthy said. “It’s not a revenue problem. It’s a spending problem.”
Asked what concessions McCarthy was willing to offer Democrats to win their support on a potential bipartisan bill raising the debt ceiling, the speaker sidestepped the question.
“I’m willing to make America stronger, to curb inflation, less dependency on China and spend less than we spent the year before,” McCarthy replied. “It’s not my responsibility to represent the socialist wing of the Democratic party.”
The clock is ticking for lawmakers to reach a solution and prevent a default that could reap devastating consequences on the American economy and global markets. The treasury secretary, Janet Yellen, reiterated in a letter sent to congressional leaders on Monday that the US government may be unable to pay its bills as early as 1 June.
With just a week left before a potential default, surveys offer a mixed picture on the public’s response to the debt ceiling negotiations. According to a CNN poll, 60% of Americans believe the debt ceiling should only be raised if Congress simultaneously approves government spending cuts, while 24% want the borrowing limit to be hiked no matter what. But another NPR/PBS NewsHour/Marist survey showed 52% of Americans support Congress raising the debt ceiling and holding a separate discussion on potential spending cuts.
For most Americans, the debt ceiling fight remains a distinctly Washington issue. The CNN survey found that 71% of Americans believe failure to address the debt ceiling would cause a crisis or major problems for the country, but only 35% said a default would damage their own finances.
And yet, economists have warned that the ramifications of a federal default would be felt in every US household. Millions of jobs could be lost, and interest rates would likely climb, while those who rely on government funding would be deeply affected. Veterans may not receive their full benefits, and doctors who care for Medicare recipients may not be reimbursed. A default would also likely trigger a severe tumble in the US stock market, reducing the value of tens of millions of Americans’ retirement accounts.
Speaking at a Wall Street Journal forum on Wednesday, Yellen warned that markets are already seeing some volatility as the debt ceiling talks drag on. Yellen again declined to offer details on how the treasury department would prioritize payments in the event of a default, but she warned that the Biden administration will face “very tough choices” if the debt ceiling is not raised.
“There will be some obligations we will be unable to pay,” Yellen said. She added, “We simply have to raise the debt ceiling.”