House Speaker Kevin McCarthy suggested that a debt-limit meeting with President Joe Biden on Tuesday broke no new ground but offered a glimmer of hope that the looming crisis could be averted.
After an hour-long meeting in the Oval Office, McCarthy told reporters, “I don’t see any new movement” and the two sides remained at a lumberjack on issues such as spending cuts.
But he also said staff members would continue to meet and that leaders would regroup on Friday, indicating talks have not broken down.
Other lawmakers offered a mix of positive and negative signals after the meeting. “There was bad news and good news,” Senate Majority Leader Chuck Schumer (D-NY) said, speaking with House Democratic Leader Hakeem Jeffries (D-NY).
McCarthy, he said, is sticking to the plan to “take the default hostage”, but said “there are probably some places where we can agree.” He said that the staff meetings can start from tonight itself.
Speaking with McCarthy after the meeting, Senate Minority Leader Mitch McConnell (R-KY) also offered some hope. He said, “The United States is not going to default: it has never happened and it never will.”
The highly anticipated Oval Office meeting took place more than 3 months before the two leaders sat down for the last time to discuss fiscal issues and just days after Treasury Secretary Janet Yellen announced that a US default could come as early as June 1. Is.
House Speaker Kevin McCarthy (R-CA) and President Joe Biden meet with other lawmakers at the White House on Tuesday to discuss the debt ceiling. (Anna Moneymaker/Getty Images)
The meeting began with a smile when President Biden told reporters, “We’re going to start over, we’re going to solve all the problems in the world.” But the meeting lasted only about an hour and apparently did not lead to any breakthrough.
It was not immediately clear how deeply the two sides delved into the policy in talks with McCarthy offering only a few details of the gathering. He noted that controversial alternatives such as the 14th Amendment did not emerge.
pressure from business groups
What observers will be watching as talks progress in the coming days is any indication that Republicans and Democrats are moving away from the currently irreconcilable position.
The meeting also comes amid growing fears from Wall Street that the impasse will put downward pressure on stocks for at least the rest of the month as Washington again flirts with a default.
Stocks closed lower Tuesday as investors waited for developments from Washington on whether talks would reduce the likelihood of a default within weeks.
Business groups are also calling for a swift agreement ahead of the meeting with the US Chamber of Commerce’s Neil Bradley saying the twin issues of spending caps and energy permitting reform are “two areas that are ripe for inclusion.” “
Business Roundtable CEO Joshua Bolton also urged bipartisan dialogue and warned that a default “would deal a severe blow to the economy, leading to massive job losses, depleting retirement savings and financial costs for families, businesses and government.” There will be higher borrowing cost.”
The White House has also recently emphasized the economic cost of default, with Yellen calling it a recipe for “economic disaster”.
During a Yahoo Finance Live appearance on Tuesday, political strategist Steve Schmidt warned Wall Street observers that the outcome here would be very difficult to predict. “There is no rationality in this and that is what American politics is broken about,” he said.
next steps
President Biden is scheduled to travel to New York’s Hudson River Valley on Wednesday, before the leaders meet on Friday. There he will give a speech on the debt limit in the district of Rep. Mike Lawler (R-NY), a vulnerable Republican under pressure to break away from his party.
An intriguing development was Tuesday when Lawler told The Associated Press that he would appear with Biden during Wednesday’s stop. He said that the White House invited him to attend and he accepted “perhaps to his surprise”.
Another wrinkle sure to complicate the weeks ahead is an overseas trip Biden plans for later this month that will take him to Japan, Australia and Papua New Guinea. He is scheduled to return just days before the default on June 1.
On Tuesday, McCarthy also said he opposes the idea of a short-term extension through Sept. 30. Take America over the edge.”
This post has been updated with additional developments.
Ben Werschkul is Washington correspondent for Yahoo Finance.
Click here for news on politics related to business and money
Read the latest financial and business news from Yahoo Finance
Source