Biden and McCarthy to discuss debt ceiling on Monday.

Biden and McCarthy to Meet on Debt Ceiling

U.S. President Joe Biden and House Republican Speaker Kevin McCarthy will meet on Monday to discuss the debt ceiling, following a “productive” phone call as the president headed back to Washington, the two sides said on Sunday. McCarthy, speaking to reporters at the U.S. Capitol following the call, said there were positive discussions on solving the crisis and that staff-level talks were set to resume later on Sunday.

Deadline Approaching

Less than two weeks remain until June 1, when the Treasury Department has warned that the federal government could be unable to pay all its debts, a deadline U.S. Treasury Secretary Janet Yellen reaffirmed on Sunday. A failure to lift the debt ceiling would trigger a default that would cause chaos in financial markets and spike interest rates.

Positive Talks

McCarthy’s comments on Sunday appeared more positive than the increasingly heated rhetoric in recent days, as both sides reverted to calling the other’s position extremist and talks stalled. “Much of what they’ve already proposed is simply, quite frankly, unacceptable,” Biden told a news conference in Hiroshima. “It’s time for Republicans to accept that there is no bipartisan deal to be made solely, solely on their partisan terms. They have to move as well.”

Spending Cuts

McCarthy said Republicans backed an increase in the defense budget while cutting overall spending, and that debt ceiling talks have not included discussions about tax cuts passed under former President Donald Trump. A source familiar with the negotiations said the Biden administration had proposed keeping non-defense discretionary spending flat for the next year.

Time is Running Out

Republicans hold a slim majority in the House and Biden’s fellow Democrats have narrow control of the Senate, so no deal can pass without bipartisan support. But time is running short as Monday’s meeting will take place with just 10 days left to hammer out a deal before hitting Treasury’s deadline. McCarthy has said he will give House lawmakers 72 hours to review an agreement before bringing it up for a vote.

• Biden willing to cut spending together with tax adjustments to reach a deal
• Republicans’ latest offer on debt ceiling was “unacceptable”
• Concerns about default are weighing on markets
• Last time the nation came this close to default was in 2011

It is crucial that a deal is reached before the deadline to avoid a default and the chaos it would cause in financial markets. Both sides seem to be making progress, but time is running out. The next few days will be crucial in determining whether a deal can be reached.