BRENDAN SMIALOWSKI/AFP via Getty Images)
- Biden met with congressional leaders on Tuesday to discuss raising the debt ceiling.
- They did not appear to come to an agreement on the best approach to do so.
- The US could default on its debt as soon as June 1 if Congress doesn't act.
Congressional leaders finally met with President Joe Biden to discuss raising the debt ceiling — and there's still no progress toward a solution.
On Tuesday, Speaker of the House Kevin McCarthy, House Minority Leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer, and Senate Minority Leader Mitch McConnell met with Biden to work toward an agreement on raising the debt ceiling and preventing an economically catastrophic default on the nation's debt, which Treasury Secretary Janet Yellen said could happen as early as June 1.
This was the first meeting McCarthy has had with Biden since February, and it came following months of stagnancy on the issue. Biden has been clear that he will only accept a debt ceiling increase that is bipartisan and without any spending cuts attached, but McCarthy recently passed a GOP-backed bill to raise the debt ceiling through the end of March 2024 — and it was accompanied by over $4.5 trillion in spending cuts. Biden vowed to veto that bill should it make it to his desk.
While Tuesday's meeting was an attempt to resolve the disagreements between parties and stave off a default, it looks like a solution was not reached.
"I didn't see any new movement," McCarthy told reporters following the meeting.
"I would hope that he'd be willing to negotiate for the next two weeks so we could actually solve this problem and not take America on the brink," he added, referring to Biden. He said the congressional leaders will meet with Biden again on Friday.
Schumer told reporters that "anyone who says my way or no way and we're going to default is not serving the country well, and I'm afraid that's what Speaker McCarthy is saying." He noted that staff will meet beginning Tuesday night to discuss the budget, and he cautioned that "the disagreements are wide."
"By not taking default off the table, Speaker McCarthy is greatly endangering America," Schumer said.
McConnell also told reporters following the meeting that "the United States is not going to default. It never has, it never will. However, elections have consequences. We now have divided government."
In the hours leading up to the meetings, McCarthy told Punchbowl News that "we should just get in the room and solve this thing. I don't think it's that difficult."
He also said that he thinks Congress needs to reach a deal "by next week," given the time constraints by which the Treasury estimates the US will run out of money to pay its bills. The Bipartisan Policy Center also released its new estimate for a default on Tuesday, saying it could happen as soon as early June.
If Congress fails to raise the debt ceiling, Americans could experience devastating consequences. A Joint Economic Committee analysis previously said it could cost Americans $20,000 in retirement savings, and mortgage and private student-loan payments could surge. Additionally, Moody's Analytics said even a short-term default could lead to a 2.6 million job loss. The White House has warned that a prolonged default could trigger a recession on par with the Great Recession — but without any government help to cushion the blow.
"We'd just be setting off a global financial crisis. What happens after that? No one knows," Zachary D. Carter, the author of "The Price of Peace: Money, Democracy and the Life of John Maynard Keynes," told Insider in January.
Every day without an agreement is a day closer to those outcomes. While there are other options on the table to raise the debt ceiling without Congress, like minting a $1 trillion platinum coin or invoking a clause in the 14th amendment that would declare the ceiling unconstitutional, the Biden administration has so far dismissed those ideas.
At this point, the fate of the US economy is in Congress' hands. And, right now, Congress doesn't seem prepared to do much, with members of both parties not quite onboard with the lines in the sand. Senator Joe Manchin, a centrist Democrat, told CNN that the White House not negotiating on the limit is "not rational" and "not reasonable." Meanwhile, the clock is ticking.
"If they fail to do it, we will have an economic and financial catastrophe that will be of our own making and there is no action that President Biden and the US treasury can take to prevent that catastrophe," Yellen told ABC News on Sunday, adding that "there is no way to protect our financial system and our economy other than Congress doing its job and raising the debt ceiling."