McCarthy Hopeful of Eventual Compromise After Meeting Biden About Debt Ceiling

Now U.S. House Speaker Kevin McCarthy Kevin McCarthy at a meeting with President Joe Biden (R) and Sen. Chuck Schumer (C) at the White House in Washington on Nov. 29, 2022. Kevin Dietsch/Getty Images

House Speaker Kevin McCarthy met with President Joe Biden at the White House on Feb. 1 to discuss the debt ceiling and spending cuts, a meeting that left McCarthy hopeful of finding common ground.

“I thought it was a very good discussion. We walked out saying we will continue that discussion. And I think there is an opportunity to come to an agreement, and I think that’s the best thing,” McCarthy told reporters shortly after the one-hour conversation.

The Speaker again refused to state which specific areas Republicans are targeting for spending cuts, or when he would announce their plan.

McCarthy said negotiating in public would be no help in reaching an agreement with the president. He would say only that Medicare and Social Security are not targets for spending cuts and that Republicans would focus on eliminating waste.

Elephant in the Room

The United States is close to exceeding its statutory debt ceiling, and Republicans are using the occasion to highlight the rapidly increasing federal debt and call for spending cuts.

The debt ceiling is the amount of debt Congress has authorized the federal government to have at one time.

Since the United States has operated on a deficit budget in all but four years since 1970, continued borrowing is essential to meet the country’s financial obligations.

U.S. $100 bills, on July 14, 2022, in Marple Township, Pa. Matt Slocum/AP Photo

The current ceiling is approximately $31.4 trillion, set 13 months ago.

“If we continue the trajectory that we’re in for the next 10 years, we'll spend $8 trillion just on interest [on the national debt],” McCarthy said.

“The greatest threat to America is our debt. Our debt is now 120 percent of GDP, meaning our debt is larger than our economy.”

Setting Expectations

Prior to the meeting, both leaders attempted to define the terms of the discussion.

Biden characterized increasing the debt ceiling as a non-negotiable requirement for maintaining the integrity and economic stability of the United States.

“I will not let anyone use the full faith and credit of the United States as a bargaining chip,” Biden said on Jan. 26 while making remarks on the economy in Springfield, Virginia.

A White House memo released on Jan. 30 reiterated the president’s position.

“As the president has said many times, the United States must never default on its financial obligations. Raising the debt ceiling is not a negotiation; it is an obligation of this country and its leaders to avoid economic chaos,” the memo stated.

The US Treasury Department building in Washington, on Oct. 18, 2018. Mandel Ngan/AFP via Getty Images

As vice president, Biden was involved in negotiations in 2011 when House Republicans demanded that President Barack Obama make deficit reductions in exchange for an increase in the debt ceiling.

The showdown prompted volatility in financial markets and caused the credit rating of the United States to be reduced for the first time in history.

The two sides eventually agreed on an increase in the debt ceiling accompanied by a deficit reduction. But the confrontation hardened Biden’s resolve to never again negotiate over the debt ceiling, a White House staffer reportedly told NBC News.

McCarthy has repeatedly said that he would not refuse to raise the debt ceiling but would ask the president to agree to reduce runaway spending.

“Look, there will not be a default,” McCarthy said on Face the Nation Sunday. “But what is really irresponsible is what the Democrats are doing right now, saying you should just raise the limit.”

After today’s meeting, McCarthy was more emphatic about reducing the national debt.

“The one thing I do know is our debt is too high. We have waste in our government. And we need to sit down together in a responsible will put us on a path to balance that will make the future of America stronger into the next century.”

A Successful Start

McCarthy’s goal for the meeting was to begin negotiations, which he believes was accomplished.

“I’ve just walked out having an hour conversation with this president, that I tell you from my perspective was a good conversation. No agreements, no promises except that we will continue this conversation,” McCarthy said.

He did acknowledge that the two are not yet close to making a deal.

“We have different perspectives. But we both laid out some of our vision of where we want to go, and I believe after a while, we can find common ground.”

The United States would have exceeded its current debt ceiling on Jan. 19 but for “extraordinary measures” taken by Secretary of the Treasury Janet Yellen to keep the government solvent.

Yellen estimated that would keep the nation below the ceiling until sometime in June.

McCarthy is hopeful that he and Biden can come to an agreement sooner than that. “I told the president I would like to see if we can come to an agreement long before the deadline so we can start working on other things.”

To accomplish that goal McCarthy said he will look for ways to compromise through discussion and negotiation.

“I think this is exactly how the government in America is designed because you have to find a compromise. The American people made the decision to have the Republicans in control in the house.

“Democrats have a small majority of the Senate, and the Democrats have a president. But we’re all Americans. We all have to work together.”