McCarthy and Biden have ‘frank’ meeting on debt ceiling amid ‘extraordinary measures’ to avoid default

House Speaker Kevin McCarthy said his first meeting with President Joe Biden as the leader of the House of Representatives left him hopeful that he can “find common ground” that will lead to an agreement on raising the nation’s statutory debt limit before a catastrophic default this June.

“We had an hour conversation about this that I thought was a very good discussion and we we walked out saying we would continue the discussion. And I think there is an opportunity here to come to an agreement on both sides,” he said while addressing reporters outside the West Wing on Wednesday.

Mr McCarthy said he told Mr Biden that he would like to see if the two men can come to an agreement “long before” the June deadline laid out by Treasury Secretary Janet Yellen, who said last month that the Treasury is now taking “extraordinary measures” to avoid defaulting on the nation’s sovereign debt.

Many Republicans, including former president Donald Trump, have demanded that the GOP use the possibility of a default on America’s soveriegn debt as leverage to extract concessions from the Democratic-controlled White House and Senate.

Prominent GOP figures frequently claim that raising the statutory debt limit to enable the US to continue meeting financial obligations — a practice that was once routine under presidents of both parties and met no objections when it was done under Mr Biden’s predecessor — is akin to authorising new spending.

That claim, however, is not how the debt limit works. Raising the debt limit does not increase or decrease the amount of money that is spent on programs that have already been authorised by Congress and have had funds allocated to them in appropriations legislation.

But experts say a failure to raise the debt limit would force the government to default on its debt and precipitate a worldwide financial crisis. The last time the US flirted with that disastrous outcome was 2011, when Republicans controlled the House and Democrats controlled the Senate and the White House. Mr Biden, then the vice president under Barack Obama, led the negotiations with congressional leaders that headed off a default, but not before the US had its credit rating decreased for the first time in history.

The White House released its own description of the meeting, which was described as “a frank and straightforward dialogue” between the president and the House speaker.

“President Biden underscored that he is eager to continue working across the aisle in good faith, after passing historic bipartisan laws during his first two years in office,” the White House said in the unsigned statement, which was released by the White House press office Wednesday evening.

The White House also said Mr Biden “made clear that, as every other leader in both parties in Congress has affirmed, it is their shared duty not to allow an unprecedented and economically catastrophic default”.

In the White House’s view, the need to raise the debt limit to allow the US to continue paying its’ debts is “not negotiable or conditional”.

The readout also noted that Mr Biden would welcome a “separate discussion” with Congress about controlling the debt while growing the economy.