White House, McCarthy Disavow Short-Term Debt-Limit Extension

McCarthy demands budget cuts in exchange for raising the debt ceiling. Biden has refused to link budget and debt talks.

If both sides maintain their stances after the meeting, it will be a sign to markets that the risks of a US credit downgrade or payment default are rising. Any comments indicating progress in coming to a budget agreement would be a sign that these risks are diminishing.

The House last month passed a bill that would raise the debt ceiling by $1.5 trillion in exchange for $4.8 trillion in budget deficit cuts over 10 years. It contains a litany of conservative priorities, including canceling green energy subsidies and tax enforcement spending from Biden’s signature legislation enacted last year.

McCarthy has called the House bill an opening offer that he is willing to use to strike a deal with Biden.

The White House has said it will only accept a “clean” no-strings-attached debt ceiling increase, although Biden is open to separate talks on the budget levels for fiscal 2024.

But the administration opposes the $130 billion cut that McCarthy has proposed for next year, saying it would devastate a range of domestic programs from housing to cancer research.

Biden plans to make his case against the GOP proposal in the district of swing-district New York Republican Mike Lawler later this week. McCarthy blasted the president for doing that in comments to reporters.

“They play politics,” he said. “They ought to spend that time here and solve it.”

Jean-Pierre countered that the consequences of the cuts Republicans are demanding shouldn’t be ignored.

“The president’s going to drive home the impact of these current discussions that we’re having, the economy, how it affects real hard-working Americans,” she said.

–With assistance from Justin Sink and Josh Wingrove.