Debt ceiling negotiations stalled after Biden meeting with McCarthy

By Maureen Chowdhury

Updated 9:04 a.m. ET, May 16, 2023
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7:51 p.m. ET, May 9, 2023

Biden says he could skip upcoming foreign travel if debt ceiling is not raised

From CNN's Nikki Carvajal

President Joe Biden said Tuesday he may skip his upcoming foreign travel if the debt ceiling is not raised by the time he is due to leave in late May.

“I’m still committed, but obviously this is the single most important thing on the agenda,” Biden told reporters after his meeting with congressional leaders on Tuesday. 

Ever the optimist, Biden said that having to cancel the trip was possible, but called it “not likely.” 

“If somehow we got down to the wire and we still hadn’t resolved this, and the due date was a matter of when I was supposed to be away, I would not go,” Biden said. “I would stay until this gets finished.”

Treasury Secretary Janet Yellen notified lawmakers last week that the US could default by June 1.

The president is scheduled to attend the G7 leaders meeting in Hiroshima, Japan, on May 19-21, followed by the Quad Leaders Summit in Sydney, Australia, on May 24. The White House said he would also make a historic stopover in Papua New Guinea during the trip.

7:51 p.m. ET, May 9, 2023

Biden says he has considered invoking 14th Amendment to raise debt ceiling, but is wary of long litigation

From CNN's Nikki Carvajal

President Joe Biden answers questions from reporters in the Roosevelt Room after holding debt limit talks with House Speaker Kevin McCarthy (R-CA), Senate Republican Leader Mitch McConnell (R-KY) and Democratic congressional leaders at the White House in on May 9 in Washington, DC.
President Joe Biden answers questions from reporters in the Roosevelt Room after holding debt limit talks with House Speaker Kevin McCarthy (R-CA), Senate Republican Leader Mitch McConnell (R-KY) and Democratic congressional leaders at the White House in on May 9 in Washington, DC. Kevin Lamarque/Reuters

President Joe Biden has been considering using the 14th Amendment to unilaterally raise the debt ceiling without the help of Congress, he said Tuesday after his meeting with congressional leaders.

However, he implied that the process of litigation may take too long to make a difference. 

“I have been considering the 14th Amendment,” he told reporters from the Roosevelt Room. He said a man he has “enormous respect for,” Larry Tribe, “thinks that it would be legitimate, but the problem is it would have to be litigated.”

Tribe is a legal scholar who is a professor emeritus at Harvard Law. This week he published an opinion piece in the New York Times headlined: Why I Changed My Mind on the Debt Limit."

“I don’t think that solves our problem now,” Biden said, adding he may reexamine in the long run. 

“I'll be very blunt with you, when we get by this, I'm thinking about taking a look at, months down the road, as to see whether what the court would say about whether or not it does work,” Biden said. 

The president was also asked about other concepts such as minting a trillion-dollar coin. He responded: “I don’t think anybody has studied the minting of the coin issue.”

More context: While the 14th Amendment is a theoretical workaround, experts have said the president unilaterally issuing debt without a ceiling increase would prompt a constitutional crisis and create severe uncertainty leading to an economic and financial crisis regardless. Previous administrations have deemed such a move as unworkable.

“There is no way to protect our financial system and our economy other than Congress doing its job and raising the debt ceiling,” Treasury Secretary Janet Yellen said.

Deputy Treasury Secretary Wally Adeyemo also tamped down the feasibility of using the 14th Amendment when asked about it Sunday, saying the only way to “guarantee” that the US can pay its bills is to raise the debt ceiling.

CNN's Sam Fossum contributed to this post.

7:24 p.m. ET, May 9, 2023

Default is not an option, Biden says following meeting on debt ceiling

US President Joe Biden speaks to the press after meeting with US Speaker of the House Kevin McCarthy, House Minority Leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell at the White House on May 9, in Washington, DC.
US President Joe Biden speaks to the press after meeting with US Speaker of the House Kevin McCarthy, House Minority Leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell at the White House on May 9, in Washington, DC. Brendan Smialowski/AFP/Getty Images

President Joe Biden pushed back against the idea of the US defaulting following a meeting with top congressional leaders about raising the federal debt limit at the White House Tuesday.

"I made clear during our meeting that default is not an option. Repeated that time and again. America is not a deadbeat nation. We pay our bills and avoiding default is a basic duty of the United States Congress," Biden said.

Biden said that he agreed with Senate Minority Leader Mitch McConnell's pledge that the US would not go into default. "He's absolutely correct."

The president said that congressional leaders will continue their discussions and meeting again Friday.

"In the meantime, our staffs are going to meet today and daily between now and then. And everyone at the meeting understood the risk of default. Our economy would fall into a significant recession," he said.

7:24 p.m. ET, May 9, 2023

Schumer blasts McCarthy for refusing to take default off the table following White House meeting

From CNN's DJ Judd

US Senate Majority Leader Chuck Schumer (D-NY) speaks to reporters after a meeting about the United States's debt ceiling in the Oval Office of the White House on May 9, in Washington, DC.
US Senate Majority Leader Chuck Schumer (D-NY) speaks to reporters after a meeting about the United States's debt ceiling in the Oval Office of the White House on May 9, in Washington, DC. Brendan Smialowski/AFP/Getty Images

Senate Democratic Leader Chuck Schumer slammed House Speaker Kevin McCarthy Tuesday for refusing to take the prospect of default off the table in negotiations over legislation to raise the nation’s debt limit.

The Senate majority leader told reporters that the speaker was endangering America, following a meeting with congressional leaders and President Joe Biden.

"What’s really troubling about the speaker’s position is, it’s a partisan bill, and he says take it or leave it, or we could default,” Schumer said. “By not taking default off the table, Speaker McCarthy is gravely endangering America and making it much harder to make progress on budget negotiations."

Schumer pointed to comments from his Republican counterpart, Senate Minority Leader Mitch McConnell, that indicated House Republicans’ debt limit proposal was unlikely to pass a Democratic-controlled chamber as evidence McCarthy must seek bipartisan support for a debt limit hike.

“Mitch McConnell himself has said that the speaker has to come to some kind of agreement with the president, and said that the Senate is never going to pass the House bill,” he said, telling reporters the GOP proposal “doesn’t have a single Democrat in support, and it gets us nowhere, because you have to negotiate to get this done.”

House Democratic Leader Hakeem Jeffries said some progress was made during the meeting with Biden. 

“We had an honest, frank discussion about a path forward, and President Biden urged us to get together — either later on today or tomorrow — our respective teams, to have a discussion about a path forward around the budget and the appropriations process, and everyone agreed,” Jeffries said. “That’s progress.”

Biden is set to meet with congressional leaders again to discuss the federal debt ceiling on Friday, according to McCarthy.

6:35 p.m. ET, May 9, 2023

McConnell urges Biden to cut deal with McCarthy after meeting at White House

From CNN's Jessica Dean

Senate Minority Leader Mitch McConnell and Speaker of the House Kevin McCarthy speak to the media after meeting with President Joe Biden at the White House on May 9, in Washington, DC. 
Senate Minority Leader Mitch McConnell and Speaker of the House Kevin McCarthy speak to the media after meeting with President Joe Biden at the White House on May 9, in Washington, DC.  Win McNamee/Getty Images

Senate Minority Leader Mitch McConnell returned to the Senate following the White House meeting over the debt ceiling describing the situation was "just like 2019" and calling on President Joe Biden to strike a deal with House Speaker Kevin McCarthy.  

McConnell recalled the situation in 2019 when Republicans controlled the White House and the Senate while Democrats had the House. 

"The way the deal finally came together is when I told President Trump, even though he was not excited about it, he had to reach a deal with Nancy Pelosi," McConnell said.

He said this is what Biden must do with McCarthy. 

"This can only be solved by the one person in America who can sign something into law and by the majority of the opposite party, in divided government," McConnell said. "Hopefully that's the direction in which we were headed now, because we're running out of time."

McConnell also pledged that the US will not default.

“The United States is not going to default. It never has and it never will,” he said. “However, elections have consequences. We now have divided government, we didn’t have divided government last year.” 

Meanwhile, McCarthy said that he has done everything in his power to prevent a default and did not take that possibility off the table.

“I'm speaker of the House,” McCarthy said. “I'm not the leader of the Senate. I'm not the president … I've done everything in my power to make sure it will not default. We have passed a bill that raised the debt limit. Now, I haven't seen that in the Senate.” 
“So,” he continued, “I don’t know.”

CNN's Nikki Carvajal and Jeremy Diamond contributed to this report.

7:08 p.m. ET, May 9, 2023

No movement in debt ceiling negotiations after meeting at White House, McCarthy says

From CNN's Jeremy Diamond

Senate Minority Leader Mitch McConnell, Speaker of the House Kevin McCarthy and President Joe Biden meet with other lawmakers in the Oval Office of the White House on May 9 in Washington, DC. 
Senate Minority Leader Mitch McConnell, Speaker of the House Kevin McCarthy and President Joe Biden meet with other lawmakers in the Oval Office of the White House on May 9 in Washington, DC.  Anna Moneymaker/Getty Images

President Joe Biden and congressional leaders maintained their positions on a potential debt ceiling deal after they met on Tuesday at the White House, House Speaker Kevin McCarthy said.

Following the meeting between top congressional leaders and the president, McCarthy said that there was no progress made in reaching a deal.

"The House has raised the debt ceiling and passed the bill. That's why we had a meeting today. Everybody in this meeting reiterated the positions they were at. I didn't see any new movement," McCarthy said. "The president said the staff should get back together. But I was very clear with the president. We have now just two weeks to go."

The speaker added that he believes that Biden should engage in good-faith negotiations about spending. Biden has said that he's willing to have conversations about spending cuts, but not with a potential default on the line.

Treasury Secretary Janet Yellen notified lawmakers last week that the US could default on its debt by June 1. Yellen and Deputy Treasury Secretary Wally Adeyemo both painted a stark picture of “economic chaos” if the debt ceiling isn’t lifted.

Tuesday’s meeting – comprised of McCarthy, Senate Minority Leader Mitch McConnell, House Minority Leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer, as well as a handful of congressional and White House aides – marked the first in-person, top-level discussions on the matter at the White House in months.

5:50 p.m. ET, May 9, 2023

McCarthy says leaders will meet with Biden on Friday

From CNN's Allie Malloy

 

Speaker of the House Kevin McCarthy leaves after meeting with President Joe Biden at the White House on May 9, in Washington, DC.
Speaker of the House Kevin McCarthy leaves after meeting with President Joe Biden at the White House on May 9, in Washington, DC. Win McNamee/Getty Images

House Speaker Kevin McCarthy told reporters Tuesday that he and top lawmakers will meet again with President Joe Biden on Friday, following their meeting at the White House on the debt ceiling. 

“The staff will get together, and we’ll get back together, the principals on Friday,” McCarthy said following their meeting. 

 

4:38 p.m. ET, May 9, 2023

Here's how a debt default could affect you

From CNN's Tami Luhby and Elisabeth Buchwald

Payments to about 66 million retirees, disabled workers and others receive monthly Social Security benefits could be delayed in a debt default scenario.
Payments to about 66 million retirees, disabled workers and others receive monthly Social Security benefits could be delayed in a debt default scenario. Kevin Dietsch/Getty Images

President Joe Biden and House Republicans have as little as a month to prevent the US from defaulting on its debt, which would impact millions of Americans and unleash economic and fiscal chaos here and around the world.

Treasury Secretary Janet Yellen warned last week that the government may not be able to pay all of its bills in full and on time as soon as June 1.

Here are just three ways that Americans could be affected by debt default:

Social Security payments: Payments to about 66 million retirees, disabled workers and others receive monthly Social Security benefits could be delayed in a debt default scenario, though it’s possible Treasury could continue making on-time payments because of the entitlement program’s trust fund, said Shai Akabas, director of economic policy at the Bipartisan Policy Center.

Almost two-thirds of beneficiaries rely on Social Security for half of their income, and for 40% of recipients, the payments constitute at least 90% of their income, according to the National Committee to Preserve Social Security and Medicare.

Other government payments could also be affected, including funding for food stamps; federal grants to states and municipalities for Medicaid, highways, education and other programs.

Federal employees and veterans benefits: More than 2 million federal civilian workers and around 1.4 million active-duty military members could see their paychecks delayed. Federal government contractors could also see a lag in payments, which could affect their ability to compensate their workers.

Also, certain veterans benefits, including disability payments and pensions for some low-income veterans and their surviving families, could be affected.

The economy: A debt default could trigger an economic downturn, which would prompt a spike in unemployment. It would come at a particularly fragile time — when the nation is already dealing with rising interest rates and stubbornly high inflation.

How much damage would be done would depend on how long the crisis continues. If the default lasts for about a week, then close to 1 million jobs would be lost, including in the financial sector, which would be hard hit by the stock market declines. Also, the unemployment rate would jump to about 5% and the economy would contract by nearly half a percent, according to Moody’s.

“It would be a body blow to the economy, and it would be a manufactured crisis,” said Bernard Yaros, an economist at Moody’s.

Read more about how the debt default could affect you here.

4:33 p.m. ET, May 9, 2023

Biden and congressional leaders take no questions during brief photo op ahead of White House meeting 

From CNN's Nikki Carvajal

President Joe Biden hosts debt limit talks with House Speaker Kevin McCarthy (R-CA), Senate Minority Leader Mitch McConnell (R-KY) and Senate Majority Leader Chuck Schumer (D-NY) in the Oval Office at the White House in Washington, on May 9.
President Joe Biden hosts debt limit talks with House Speaker Kevin McCarthy (R-CA), Senate Minority Leader Mitch McConnell (R-KY) and Senate Majority Leader Chuck Schumer (D-NY) in the Oval Office at the White House in Washington, on May 9. Kevin Lamarque/Reuters

President Joe Biden was tightlipped ahead of a meeting with all four congressional leaders on Tuesday, only telling reporters in the Oval Office during a brief photo-op that the leaders would take questions later.

“I'm sure that my colleagues and I will present things to you after this is all over,” the president told reporters, “but in the meantime, just want to welcome you, let you know (what) we're doing. We're not gonna take any questions now. We're gonna get started and solve all the world’s problems."

Biden was seated in the center of the room, closer to Senate Majority Leader Chuck Schumer and House Minority Leader Hakeem Jefferies.

Seated opposite from them were House Speaker Kevin McCarthy and Senate Minority Leader Mitch McConnell. 

When reporters entered the room, one joked that they were “very civilized” when walking in. 

“You’re setting a great example for us,” the president quipped.