Biden, McCarthy speak on debt crisis, one GOP negotiator says 'thorny issues' remain

WASHINGTON — President Joe Biden and House Speaker Kevin McCarthy spoke directly Saturday evening as they raced to strike an agreement that would resolve the looming debt crisis ahead of a June 5 deadline and avert a catastrophic U.S. default.

Biden spoke earlier in the day with Democratic leaders in Congress to discuss the status of the talks, according to three people familiar with the situation, who spoke on condition of anonymity because they were not authorized to discuss the matter publicly. But the two sides have not reached a deal yet.

"Big, thorny issues remain," one of the top negotiators, Rep. Patrick McHenry, R-N.C., told reporters in the evening.

The Republican House speaker gathered top allies behind closed doors at the Capitol as negotiators pushed for a deal that would raise the nation's borrowing limit and avoid a catastrophic default, while also making spending cuts that House Republicans are demanding.

As he arrived at the Capitol early in the day, McCarthy said Republican negotiators were "closer to an agreement."

Treasury Secretary Janet Yellen told Congress that the United States could default on its debt obligations by June 5 — four days later than previously estimated — if lawmakers do not act in time to raise the federal debt ceiling. The extended "X-date" gives the two sides a bit of extra time as they scramble for a deal.

But as another day dragged on with the country watching and waiting for an outcome, it appeared some of the problems over policy issues that have dogged talks all week remained unresolved.

Both sides suggested one of the main holdups is a GOP effort to expand existing work requirements for recipients of food stamps and other federal aid programs, a longtime Republican goal that Democrats have strenuously opposed. The White House said the Republican proposals were "cruel and senseless."

They also appear to still be laboring over a compromise on federal permitting changes that would ease regulations for developing oil, gas and renewable energy projects and foster new transmission line connections.

McCarthy, who dashed out before the lunch hour and arrived back at the Capitol with a big box of takeout, declined to elaborate on those discussions. One of his negotiators, Louisiana Rep. Garret Graves, said there was "not a chance" Republicans might relent on the work requirements issue.

House negotiators left the Capitol at 2 a.m. the night before, only to return hours later.

Failure to lift the borrowing limit, now $31 trillion, to pay the nation's incurred bills, would send shockwaves through the U.S. and global economy. Yellen said failure to act by the new date would "cause severe hardship to American families, harm our global leadership position and raise questions about our ability to defend our national security interests."

The president, spending part of the weekend at Camp David, continued to talk with his negotiating team multiple times a day, signing off on offers and counteroffers.

Biden and McCarthy have seemed to be narrowing on a two-year budget-cutting deal that would also extend the debt limit into 2025 past the next presidential election. The contours of the deal have been taking shape to cut spending for 2024 and impose a 1% cap on spending growth for 2025.

All sides are hearing from other lawmakers, including Sen. Kyrsten Sinema, the independent from Arizona, who has been in the center of big policy debates, and Rep. Josh Gottheimer, D-N.J., of the bipartisan Problem Solvers Caucus.

Rep. Tom Emmer of Minnesota, the Republican whip who is in charge of counting the votes from McCarthy's slim majority to ensure passage of any deal, said he is telling rank-and-file lawmakers not to believe what they're hearing until party leaders deliver the news about any deal.

"We're constantly in touch with our members, letting them know that what is being reported, you should not accept that," Emmer said. "If there's an agreement, we will let them know."

Any deal would need to be a political compromise to pass in the divided Congress. Many of the hard-right Republicans in Congress are pressing McCarthy to hold out.

The Republican proposal on work requirements would save $11 billion over 10 years by raising the maximum age for existing standards that require able-bodied adults who do not live with dependents to work or attend training programs.

Current law applies those standards to recipients under the age of 50. The GOP plan would raise the age to include adults 55 and under. It would lower the number of exemptions that states can grant to some recipients subject to those requirements.

Biden has said the work requirements for Medicaid would be a nonstarter. He initially seemed potentially open to negotiating minor changes on food stamps, now known as the Supplemental Nutrition Assistance Program, or SNAP, but his position has appeared to harden.

Lawmakers are not expected to return to work from the Memorial Day weekend before Tuesday, at the earliest, and McCarthy has promised lawmakers he will abide by the rule to post any bill for 72 hours before voting.

The Democratic-held Senate largely stayed out of the negotiations, leaving the talks to Biden and McCarthy. Senate Majority Leader Chuck Schumer of New York pledged to move quickly to send a compromise package to Biden's desk.