The last time House Speaker Kevin McCarthy sat in the Oval Office with President Biden

three months ago

he struck a firm but hopeful tone, telling reporters the couple could find “common ground” to avoid a catastrophic US debt default.

Ninety-seven days later, when McCarthy met with the president for the second time since becoming speaker on Tuesday, both sides were no closer to a compromise that paved a dangerous path to historic bankruptcy that would reverberate in the global economy.

“I haven’t seen any new movement,” McCarthy said after meeting with Biden and House Democratic leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and Minority Leader Mitch McConnell.

House Republicans have refused to raise the $31.4 trillion debt limit unless accompanied by discretionary spending cuts. Biden and Democrats insist they will not negotiate

on

cuts

unless Congress agrees to raise the statutory borrowing limit separately without conditions.

The pivotal meeting was also the biggest test yet for McCarthy, who must balance the urgency of raising the debt limit with appeasing far-right conservatives who could end his speakership.

Bakersfield’s Republican seized the gavel in January by caving

to the hard fact of his party, make an agreement that makes it possible

S

a single member to force a vote to remove him from the role. Any deal huh

negotiating with the White House or Senate would have to convince that same group of right-wing House members.

McCarthy’s critics say his deal with his party’s right wing weakened his position. But the speaker defied it

expectations in recent weeks leading Republicans to pass a bill to raise the debt ceiling by $1.5 trillion or for just one year, whichever comes first, while also capping future spending

increases by 1% per year?

at 1%

annual growth

in the coming decade. Such a bill would trigger another fiscal confrontation months before the 2024 presidential election.

The legislation, which would reduce future deficits by $4.5 trillion, also addresses democratic priorities. The bill would add new work requirements for

MedicaidMedicaid?

CS: Yes, but also food stamps and other welfare programs receivers and

others receiving federal aid

, ending Biden’s student loan forgiveness program, reclaiming unused COVID-19 funds, and repealing parts of the White House’s climate agenda. While the bill has no chance of passing a Democratic-controlled Senate or securing Biden’s signature, it strengthens McCarthy’s hand as he tries to strike a deal with a hitherto uncompromising White House.

Fabian Nez, a Democrat and former speaker of the California Assembly who negotiated budgets with McCarthy, describes his tactics as “three-dimensional,” insisting that the House speaker take a position that takes into account the entire Republican conference in instead of just with his right flank. .

“Kevin is never do or die in the way he approaches negotiations,” Nez said. “He’s usually at his best when he’s at gunpoint.”

But so far, the methods of McCarthy have not moved Biden, whose own budget is proposing

reduction of the deficit by

$3 trillion over the next decade by raising taxes on the wealthy and corporations and allowing the government to negotiate drug prices to reduce health care spending.

McCarthy is the ‘honest man’ who ‘sold just about everything’ [to the] extreme, extreme right,” Biden said in an interview with MSNBC on Friday.

There’s the Republican Party and there’s the MAGA Republicans, the president said, referring to former President Trump’s Make America Great Again political movement. And the MAGA Republicans have really put him in a position where in order to remain speaker he has to agree to things that he may believe but are just extreme.

The president, who announced his re-election bid in April, has used the debit cap battle to sharpen his campaign rhetoric by portraying Republican cuts as damaging to America’s middle class. The White House has circulated several memos claiming that the GOP bill would lower Republican priorities, including policing, anti-drug trafficking efforts and veterans’ services.

Before Biden sat down with congressional leaders, the White House had already announced that he would be traveling to a convention in the Hudson River Valley

district on Wednesday to deliver a speech on how the GOP bill would include cuts to veterans’ health care visits, school staffing and a food program for homebound seniors. The district, which Biden won in 2020, is home to Rep. Mike Lawler (RN.Y.), a vulnerable Republican who will likely need to win re-election if the GOP is to have any hope of extending its five-seat majority in the House next year.

Instead of focusing his attention on McCarthy, Biden leaned on Senate Minority Leader Mitch McConnell, with whom he made deals during the 2013 fiscal cliff crisis, the 2011 debt ceiling impasse, and the Bush tax cut battle in 2010. But McConnell insists he’s giving up on this one.

Rohit Kumar, McConnell’s chief negotiator during the 2011 debt talks, said the minority leader calculated that intervening in the House would not produce the same response as a Biden-McCarthy deal. “If he thought that a deal he made with President Biden would have a reasonable chance of becoming law, he might be more willing to take on that role,” said Kumar, now co-leader of the national tax office of PwC.

Much of Biden’s thinking has been shaped by the debt crisis of 2011, when he was Obama’s vice president and the administration agreed to massive budget cuts that prevented bankruptcy but ultimately led to the country’s credit rating being downgraded for the first time.

The episode led Obama to draw a red line when it came to the debt ceiling. Confused by previous sentence? A short-term extension of the debt limit

which would meet the deadline to raise the federal borrowing ceiling to align with the annual government funding talks that end Sept. 30.

was initially put forward, but both McCarthy and the White House rejected the idea Tuesday. “A short-term extension is also not our plan,” White House Press Secretary Karine Jean-Pierre told reporters. “This can be easily resolved. This is a man-made crisis leading the speaker.”

But time is short. Treasury Secretary Janet Yellen has warned that on June 1, the US will be unable to pay its bills for the first time ever. early June and early August, in support of Yellen’s forecast.

The bond market has already reacted to fears that the US will default. Short-term bond prices have fallen steadily since the end of April.

“If no solution is found by June, policymakers can play Russian Roulette daily with the full confidence and honor of the United States, risking financial disaster for their constituents and the country,” said Shai Akabas, director economic policy in the Bipartisan. Policy Center.

According to Kumar, there is still plenty of time to negotiate, even though Biden will travel abroad next week for a week-long trip to Japan, Papua New Guinea and Australia.

.

He recalled his own experience in 2011 when “there was no prospect of an agreement” just 72 hours before the deadline. “Unfortunately, because of the history of this issue, you cannot know with confidence that no deal will be made and that no breakthrough will be made in the past few days,” he said.

Phil Schiliro, a former director of legislative affairs in the Obama White House, said he sees the parallels to 2011 in that the issue lies within the House Republican caucus.

“It wasn’t about President Obama being able to reach an agreement. It was about whether the Republican caucus in the House would support an agreement that the leaders reached,” he said.

The clear difference this time around, Schiliro said, is that in previous fights

,

There were few thoughts that breaching the debt ceiling was a serious possibility of a catastrophic outcome that could plunge the country into recession.

“American families are ultimately the hostages, which is why default cannot be an option,” he said.