Biden, McCarthy talk debt divisions without breakthrough

by Alexis Simendinger & Kristina Karisch

President Biden says it shouldn’t happen. Speaker Kevin McCarthy (R-Calif.) says no one wants it to happen. And the Federal Reserve chairman said on Wednesday that it’s up to Congress to prevent U.S. default by voting to let the Treasury Department borrow to pay the country’s bills.

After spending an hour together in the Oval Office during a much-anticipated tête-à-tête about the debt limit and other topics, Biden and McCarthy agreed they see the problem differently.

“I don’t want to put any words in his mouth,” McCarthy told reporters while standing in the White House driveway on a cold day after a meeting he sought, The Hill’s Brett Samuels reported.

“I thought it was a very good discussion and we walked out saying we would continue the discussion,” McCarthy said. “I think there is an opportunity here to come to an agreement on both sides. … My role right now is to make sure we have a sensible, responsible ability to raise the debt ceiling but not continue this runaway spending.”

Biden told the Speaker that he would not negotiate on the limit, but is open to a “separate discussion with congressional leaders about how to reduce the deficit and control the national debt while continuing to grow the economy,” according to a White House summary of the meeting.

McCarthy would not make any explicit commitments that the U.S. would not default, which the president wants. But the Speaker spoke positively.

The New York Times: Biden, McCarthy discuss debt limit as financial crisis looms.

There is nothing in there with me walking away that does not believe that at the end of the day we can come to an agreement,” McCarthy said.

What that agreement will be is still months away, according to veterans of previous debt ceiling battles. Senate Minority Leader Mitch McConnell (R-Ky.) — who helped broker last-minute compromises during past budget impasses and the 2011 debt ceiling battle (Vox) — called for good-faith negotiations on Wednesday while accusing Senate Majority Leader Charles Schumer (D-N.Y.) of hypocrisy when it comes to the statutory cap on borrowing, which Treasury reached last month (The Hill).

Federal Reserve Chairman Jerome Powell put the responsibility on Congress to lift the borrowing limit. “There is only one way forward here and that is for Congress to raise the debt ceiling,” he said Wednesday during a press conference to announce another interest rate hike. “Any deviations from that path would be highly risky and no one should assume that the Fed can protect the economy” (The Wall Street Journal).

Anxieties that the United States might default because of the partisan impasse over accumulated debt and federal spending have revived talk that the Treasury could prioritize debt payments to prevent disaster. Treasury officials and the administration have rejected that possibility.

“I believe that Congress will wind up acting as it must in the end to raise the debt ceiling,” Powell said, eager to discourage the idea that the central bank would resolve political stalemate. “I believe it will happen” (Yahoo Finance).

McCarthy says the Pentagon’s budget is on the table as Republicans seek to negotiate savings over a 10-year budget window. His caucus has not identified where members envision cuts but have said Social Security and Medicare will not be touched. McCarthy has agreed with conservative lawmakers to cap all new discretionary spending at fiscal 2022 levels, which would amount to a $75 billion cut in the defense budget. The Speaker has disputed that specific figure, reports The Hill’s Brad Dress.

• The Hill: In a dramatic move served cold, McConnell removed GOP Sens. Rick Scott (Fla.) and Mike Lee (Utah) from the powerful Senate Commerce Committee. The pair had attempted to oust him as GOP leader.
• The New York Times: Meet the women on the House and Senate Appropriations committees who want to avoid a spending train wreck.
• The Hill: Republicans on Wednesday advanced a resolution to the House floor that would oust Rep. Ilhan Omar (D-Minn.) from the House Foreign Affairs Committee based on past comments critical of Israel, for which she apologized.

Truth & consequences? Another day, another headline about Rep. George Santos (R-N.Y.). FBI agents are investigating the congressman’s role in an alleged GoFundMe scheme involving a disabled U.S. Navy veteran’s dying service dog, Politico reported on Wednesday. Two agents contacted former service member Richard Osthoff on behalf of the U.S. Attorney’s Office in the Eastern District of New York.

New York Democrat Robert Zimmerman lost to Santos by more than 7 percentage points in November before the world caught wind of Santos’s lies and résumé inventions. “We’re going to get him out of office,” Zimmerman assured a woman during a recent League of Women Voters luncheon. “As you should!” she replied (The Washington Post).

The investigators: The Hill’s Emily Brooks and Rebecca Beitsch report on House Judiciary Committee Chairman Jim Jordan (R-Ohio), a pugnacious former wrestling coach, defender of former President Trump and now a McCarthy ally who vows to wield GOP subpoena power against the White House and Biden. Jordan chaired his panel’s first hearing on Wednesday, focused on the administration’s immigration and border policies (The Hill). The House investigative fireworks will continue on that subject next week.