House Speaker Kevin McCarthy on Wednesday said he was optimistic about finding “common ground” with President Joe Biden over the U.S. debt ceiling, but refused to discuss specific budget cuts he is seeking in exchange for raising the borrowing limit.
“I can see where we can find common ground,” McCarthy told reporters outside the White House, where he met for about 90 minutes with Biden.
Biden has said that the U.S. debt limit should be raised without condition, while McCarthy and his fellow Republicans want to cut spending in exchange for increasing the borrowing limit.
Prior to the meeting at the White House, Biden was expected to press California Republican McCarthy to commit to avoiding default by the U.S. The president also demanded details of spending cuts sought by Republicans.
McCarthy did not answer directly when asked by a reporter about avoiding default.
In a statement late Wednesday, the White House said “President Biden made clear that, as every other leader of both parties and Congress has affirmed, it is their shared duty not to allow an unprecedented and economically catastrophic default” adding that doing so is “not negotiable or conditional.”
Ed Mills, Washington policy analyst for Raymond James, said in a note before the meeting that any deal is likely months away.
“We view it as unlikely that the Wednesday meeting will produce any significant developments toward a debt ceiling deal, especially given that House Republican leadership has not yet committed to avoiding a default and recent GOP proposals for fallback plans such as debt prioritization,” he wrote.
On Jan. 19, Treasury Secretary Janet Yellen told top U.S. lawmakers that her department had begun to use “extraordinary measures” due to the federal government approaching its ceiling for borrowing. Those maneuevers should prevent a U.S. default over the next few months. Yellen has said it’s “unlikely that cash and extraordinary measures will be exhausted before early June.”
Washington Watch: U.S. runs up against its debt limit, so Treasury starts using ‘extraordinary measures’: Here’s what that means
U.S. stocks
SPX,
jumped higher on Wednesday, after Federal Reserve Chairman Jerome Powell played down an easing of financial conditions and acknowledged that inflation was beginning to move in the right direction.
The Fed chief also, as expected, did push back against market expectations for the central bank to cut rates by year-end and said rates were still not sufficiently restrictive as it continues its inflation fight.
