Updated May 9, 2023 at 7:57 PM ET
President Biden and congressional leaders said they would meet again on Friday to see if they could make progress on how to lift the nation's debt limit ahead of a looming deadline after an hour-long meeting failed to shake either side from their opening positions.
Their Tuesday afternoon meeting came a week after Treasury Secretary Janet Yellen warned lawmakers that without raising the debt ceiling, the government could run short of money to pay its bills as early as June 1.
"Over these last few days and weeks, there's a lot of politics, posturing and gamesmanship and it's going to continue for a while, but I am squarely focused on what matters and we're getting to work," Biden told reporters, saying he was willing to postpone a planned trip this month to Japan and Australia to meet world leaders if it was needed to avert default.
Biden also said for the first time that he has been considering invoking the 14th Amendment of the Constitution to keep making payments on the nation's debt — but said he doesn't think there's enough time left before a looming deadline to use the untested strategy.
It was the first time Biden and House Speaker Kevin McCarthy, R-Calif., met on this issue since February. They were joined by House Minority Leader Hakeem Jeffries, D-N.Y., along with Senate Majority Leader Chuck Schumer, D-N.Y., and Senate Minority Leader Mitch McConnell, R-Ky.
"Everybody in this meeting reiterated the positions they were at. I didn't see any new movement," McCarthy told reporters after he left the White House.
Biden described the talks as "productive" though he said McCarthy was occasionally "maybe a little over the top."
Schumer told reporters "there are large differences between the parties" but said Democrats and Republicans "can try to come together" on spending issues. He said staff would start meeting Tuesday night or Wednesday to see where there was room for compromise on spending.
Biden said he is willing to have a separate discussion with leaders about the budget and spending priorities, but said the threat of default must be removed from the table.
He said he would not rule out a short-term extension of the debt limit, but said "I think it should be for more than a year so we can move things along." He also said he was willing to "take a hard look" at giving up some unspent COVID-19 funding that Congress had appropriated. "We don't need it all," he said.
McConnell says the United States will not default
Last month, House Republicans passed a bill that would increase the debt limit by $1.5 trillion or through March 2024 — whichever comes first — and include trillions in deficit reduction.
McCarthy won a protracted fight for the speaker's gavel after pledging to a bloc of hardline Republican lawmakers that he would not allow a House vote on a bill to increase the country's borrowing authority without federal spending reductions.
Democrats and the White House have insisted that the House bill is a nonstarter.
Biden and Democrats have pointed out that Republican lawmakers raised the debt limit multiple times when former President Donald Trump was in office.
Most Republican senators signed on to a letter from Sen. Mike Lee of Utah saying they oppose raising the ceiling without "substantive spending and budget reforms."
That included McConnell. After the meeting, he noted that Trump had reached a compromise on spending with then-Democratic Speaker Nancy Pelosi to raise the debt limit in 2019, and said Biden needed to take a similar approach.
"This is not unusual. We've been here before," McConnell said. He warned the leaders were running out of time to reach a deal, but sought to reassure markets.
"The United States is not going to default. It never has and it never will," McConnell said.
But Mark Zandi, chief economist at Moody's Analytics, said after the meeting that he expects drama until the deadline, which increases the possibility that the deadline is breached.
"We now assign a 10% probability to a breach," Zandi wrote in an update. "If there is a breach, it is much more likely to be a short one than a prolonged one. But even a lengthy standoff no longer has a zero probability. What once seemed unimaginable now seems a real threat."
Biden says he has been considering the 14th Amendment
Biden said he has been considering invoking the 14th Amendment of the Constitution to keep making debt payments. It says that "The validity of the public debt of the United States ... shall not be questioned."
The idea has been raised repeatedly over the years. Recently, Harvard's Laurence Tribe — a former adviser to Biden — said he thinks it would be a legitimate way to solve the problem.
"The problem is, it would have to be litigated," Biden said, noting a debt limit extension would likely to be needed to avoid economic calamity. "I'm thinking about taking a look at it months down the road," he said. "I don't think that solves our problem now."
When asked later in the day about the idea, McCarthy said it was not brought up at the meeting, and he criticized the suggestion that Biden could unilaterally lift the debt ceiling using the 14th Amendment. "If you're the leader of the free world ... and you're going to go to the 14th Amendment," McCarthy said, "I would think you're kind of a failure of working with people across sides of the aisle or working within your own party to get something done."
The clock is ticking
The U.S. hit its current debt limit — $31 trillion — in January.
The Treasury Department has been employing extraordinary measures to essentially act as a Band-Aid for several months. If Congress fails to raise the debt limit by the time those measures are exhausted, which Yellen says could happen as soon as June 1, there would be an unprecedented debt default, whose effects would likely be felt worldwide and lead to a recession in the United States.
This is also a short month for lawmakers to try to address the issue. Both the Senate and the House have separate recess weeks planned.
Over the weekend, both Jeffries and House Financial Services Committee Chairman Patrick McHenry, R-N.C., didn't rule out a short-term solution to buy lawmakers more time to craft a longer-term deal.
"Everything's on the table at this point," McHenry said on Face the Nation.
Business groups urge compromise
Ahead of the meeting, a group representing the nation's largest companies urged action. Business Roundtable CEO Joshua Bolten said even the threat of default could come at a high cost.
"A default would deliver a severe blow to the economy, leading to widespread job losses, decimated retirement savings and higher borrowing costs for families, businesses and the government," Bolten said. "Failing to raise the debt limit would also threaten the U.S. dollar's central role in the global financial system to the benefit of China."
The Chamber of Commerce urged a compromise deal that includes reforms for permits for big programs as well as restraints on spending. "While there are plenty of areas where the two parties disagree, two areas that are ripe for inclusion are permitting reform and an agreement on discretionary spending caps, both of which can improve the federal government's fiscal outlook," said Neil Bradley, the chamber's chief policy officer.
NPR's Lexie Schapitl and David Gura contributed to this report.
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