US president Joe Biden called on Republicans to moderate their “extreme positions” as he vowed to speak directly to House Speaker Kevin McCarthy on Sunday in a bid to ease tensions in the escalating US debt ceiling crisis.
At a press conference in Hiroshima, Japan, for the G7 leaders summit on Sunday, Biden said he was planning to call McCarthy during his flight back to Washington to see if negotiations could get back on track.
“My guess is he’s going to want to deal directly with me in making sure we’re all on the same page,” Biden said. “It’s time for Republicans to accept that there is no bipartisan deal to be made solely on their partisan terms. They have to move as well.”
McCarthy later rebuked the president’s comments in an appearance on Fox Business, accusing Biden of moving the goalposts by seeking to tie spending cuts to increased tax revenues.
“It seems as though he wants default more than he wants a deal. That’s not where I’m at,” McCarthy said, adding that he was expecting a call from the president within an hour.
The lack of any movement in the talks will be of concern because the limit on government borrowing needs to be raised by June 1 or Washington faces an unprecedented default on US debt. Such an eventuality could plunge global markets into turmoil and the US economy into recession.
Janet Yellen, US Treasury secretary, on Sunday warned that if the debt ceiling is not raised soon, there will be “hard choices to make about what bills go unpaid”.
Any deal on the debt ceiling would take several days to pass both houses of Congress and be signed by the president. Even getting close to the deadline could spook investors and trigger economic disruptions — and the hardening rhetoric will raise uncertainty and alarm about the outcome of the talks.
During his remarks in Hiroshima, Biden said his administration had weighed invoking the 14th amendment of the US constitution, which states that the “validity” of US debt “shall not be questioned”. This would allow the Treasury to ignore the borrowing limit rather than default.
“I think we have the authority. The question is could it be done and invoked in time,” he said.
But such a move could still create huge disruptions to markets and a cascade of legal challenges, and Biden suggested it would be unworkable. “We have not come up with a unilateral action that would succeed in two weeks, so it’s up to lawmakers,” he said.
Yellen echoed Biden’s comments on Sunday, telling NBC News that while there had been “much discussion” of the 14th amendment, it “doesn’t seem like something that could be appropriately used in these circumstances, given the legal uncertainty”.
“Given the tight timeframe we’re on . . . my devout hope is that Congress will raise the debt ceiling,” she added.
On Saturday, McCarthy had poured cold water on any hopes of a market-soothing breakthrough, saying there could be no progress until Biden returned to Washington late on Sunday from Japan.
“I don’t think we’re going to be able to move forward until the president can get back in the country,” McCarthy said. “Unfortunately, the White House has moved backwards,” he added, saying that the “socialist wing” of the Democratic party was having a “real effect” on Biden’s negotiating stance.
Biden is not expected to be back at the White House until 11pm on Sunday local time.
Given the negative economic repercussions of a default, as well as the unpredictable political impact, Biden and congressional Republicans are still expected to ultimately reach an agreement.
Many in Washington say the setback in the talks, which has been accompanied by pressure not to concede from factions within both the Democratic and Republican parties, could be a necessary precursor to an eventual deal, rather than a sign that the talks are veering dangerously off course.
To approve a debt ceiling increase, Republicans have been pushing for deep spending cuts over 10 years, while Democrats would accept much more limited budgetary cuts over a shorter period of time. They have also clashed over imposing new work requirements for social spending programmes.
