Feb 1, 2023
Biden and McCarthy’s ‘First Date’ to Set Tone for Upcoming Debt Ceiling Battle
(Bloomberg) -- President Joe Biden and House Speaker Kevin McCarthy will finally size each other up, after weeks of trading public barbs over spending cuts and deficits while the US debt limit hangs in the balance.
“Show me your budget, I’ll show you mine,” Biden said Monday when asked what his message would be when the two meet Wednesday afternoon at the White House. McCarthy says he’ll bring a lot of ideas but his fractious caucus has yet to settle on their list of demands.
Senate Majority Leader Chuck Schumer, no stranger to Oval Office meetings, jabbed that McCarthy going to the White House without a plan is like a card player showing up to play with no cards. John Thune, the Senate’s No. 2 Republican, was more charitable.
“He’s the man of the moment. He’s the speaker of the House and ultimately the House Republican majority is going to have to figure out how to navigate this and get something through the House,” Thune said. “The negotiations with the president are the starting point and not the ending point.”
It’s the two men’s first face to face since McCarthy won the speaker’s gavel, and veterans of past debt standoffs concur that the threat of a US default is greater than ever. House Republicans are demanding spending reductions, while Biden has said he’s open to fiscal reforms but won’t negotiate over the borrowing cap.
A default would wreak havoc on the economy, raise borrowing costs and rattle the president’s plans to announce a reelection campaign. McCarthy will be eager to strengthen his standing among Republicans after his speakership bid went to 15 ballots, forcing him to make promises to far-right lawmakers that leave him little room to negotiate a compromise.
McCarthy, speaking Tuesday, called for Biden to negotiate. “Why would you put the economics of America in jeopardy? Why would you play political games? I’m not,” he told reporters, adding he was willing to “get this done long before the debt limit hits a point we have to get something done.”
He delivered the same message to fellow House Republicans during a closed-door meeting Wednesday morning.
“I’m going to sit down with the president and see if he doesn’t want to play politics and if he wants to start negotiating,” McCarthy said afterwards. “Let’s sit down and start negotiating where we come together for the American people to put us on a better path.”
McCarthy said he has a “lot of ideas” but Republicans have yet to coalesce around a plan.
Congressional Republicans also are preparing a spate of investigations into Biden’s administration and his son Hunter Biden. The president and other Democrats, at the same time, are challenging McCarthy to specify what reductions they want, a strategy intended to lay bare the GOP’s own internal divisions.
What’s the Debt Ceiling, and Will the US Raise It?: QuickTake
The first meeting between the new speaker and president is not expected to yield any agreement on how to lift the debt ceiling. Such a solution is expected much closer to the true deadline this summer.
The personal dynamics between the two leaders, though, will be closely watched. Unlike Senate Minority Leader Mitch McConnell, whom Biden served with for decades and personally negotiated fiscal breakthroughs with on several occasions as vice president, Biden’s working relationship with McCarthy is limited.
Both parties sought to frame the Wednesday meeting on their terms. McCarthy has said that reductions in Social Security and Medicare should be “off the table,” but has left the door open to other cuts. McCarthy has said the US would not default.
The White House released a memo saying Biden would press McCarthy to commit to preventing the US from defaulting and challenge the Republican to release his own, detailed spending plan.
“It’s kind of like a first date,” said former Speaker Newt Gingrich after meeting with McCarthy on Tuesday, tempering expectations for the encounter between the current speaker and president. Gingrich, a veteran of congressional budget battles during the Clinton years, called on Congress to raise the debt ceiling while also passing “responsible” spending cuts.
Biden’s proposed budget for the 2024 fiscal year — to be released March 9 — will “show how the president plans to invest in America, continue to lower costs for families, protect and strengthen Social Security and Medicare, and reduce the deficit,” National Economic Council Director Brian Deese and Office of Management and Budget Director Shalanda Young wrote in the memo, released Tuesday.
The Treasury Department announced in January that the US was up against its debt ceiling, and had begun taking extraordinary measures to avoid a breach. The debt ceiling has been raised repeatedly over history to avoid a default that would send US borrowing costs soaring and exacerbate the already gloomy fiscal outlook.
While there’s some time left — the Treasury says it won’t breach the ceiling before June, while outside experts expect the so-called X-date to come roughly in the summer — both sides so far have given little indication of what a deal could look like.
Biden’s strategy so far is to wait and see what Republicans propose. The president at a Democratic National Committee fundraiser in New York on Tuesday called McCarthy a “decent man,” but said he had made concessions to the right wing of his party that were “off the wall” to secure the speakership.
--With assistance from Laura Litvan.
©2023 Bloomberg L.P.
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