Biden and McCarthy to discuss debt ceiling Monday as staff-level talks resume

By Kevin Liptak, Betsy Klein, Sam Fossum, Arlette Saenz, Kristin Wilson and Phil Mattingly, CNN

Hiroshima, Japan (CNN) — Staff-level discussions over the debt ceiling and budget between the White House and congressional Republicans will resume Sunday evening after President Joe Biden and House Speaker Kevin McCarthy spoke by phone in the afternoon, according to a White House official.

Biden and McCarthy will meet later on Monday, the official added.

McCarthy said the phone call with Biden, who was aboard Air Force One returning to Washington from Japan, was “productive.”

In an 18-minute gaggle with reporters at the US Capitol, the California Republican said that while the timing of the meeting was still being worked out, it was likely to be Monday afternoon. It is not expected to include other congressional leaders.

McCarthy’s more optimistic tone comes after the president had issued a stark warning earlier Sunday that congressional Republicans could use a national default to damage him politically and acknowledged that time had run out to use potential unilateral actions to raise the federal borrowing limit, as the deadline to reach an agreement neared.

Characterizing GOP proposals as “extreme” and warning they couldn’t gain sufficient support in Congress, Biden said he wasn’t able to promise fellow world leaders gathered in Hiroshima, Japan, for Group of Seven talks that the US would not default.

“I can’t guarantee that they will not force a default by doing something outrageous,” he said at a news conference before he left for Washington.

Sharp disagreements

Biden’s remarks were the latest indication that talks between the White House and congressional Republicans remained far apart.

Republicans have been seeking spending cuts in the federal budget in exchange for their support to raise the nation’s borrowing limit. On Sunday, Biden acknowledged “significant” disagreement with Republicans in some areas, insisting that while he’s willing to cut spending, tax “revenue is not off the table” as part of the deal.

McCarthy, in an interview Sunday with Fox News, disagreed with that characterization, saying Biden previously told him that tax increases were “off the table” and that he wouldn’t agree to them.

“He’s now bringing something to the table that everyone said was off the table,” the California Republican said. “It seems as though he wants to fault more than he wants a deal.”

The budget proposal Republicans presented earlier this weekend would set budget caps for six years, with the cap structure remaining the same as the House-passed bill at fiscal year 2022 levels, according to a source with direct knowledge of the matter.

The proposal included at least two items that weren’t part of their initial bill: immigration provisions and additional changes to the work requirements for food stamps, the source said.

At his news conference Sunday, Biden said that much of what Republicans have proposed “is simply, quite frankly, unacceptable.”

“It’s time for Republicans to accept that there’s no bipartisan deal to be made solely, solely on their partisan terms. … They have to move, as well,” the president said.

Pressed on whether he would be to blame for a default scenario, Biden said that based on what he’s offered, he should be blameless but conceded that “no one will be blameless” as he suggested some of his political rivals could be encouraging a default to sabotage his reelection efforts.

“I think there are some MAGA Republicans in the House who know the damage it would do to the economy, and because I am president, and a president is responsible for everything, Biden would take the blame and that’s the one way to make sure Biden’s not reelected,” he said.

McCarthy, in turn, blamed what he called the “socialist wing of the Democratic Party” for driving Biden’s goals in the negotiations.

“The president keeps changing positions every time Bernie Sanders has a press conference. He gets reactive and he shifts,” the speaker said as he arrived at the US Capitol in Washington on Sunday.

Meanwhile, Biden’s top national security aide told CNN that the stalled debt ceiling and budget negotiations have not undercut American leadership abroad or undermined the G7 summit as it came to a close Sunday.

“When you look at the totality of the last three days, it’s actually a reflection of and an exclamation point on the way in which President Biden has led on the world stage. People understand democracies, and they understand that there are moments in domestic politics when you have got to look at the home front,” national security adviser Jake Sullivan told CNN’s Jake Tapper on “State of the Union.”

Biden outlines shortcomings of 14th Amendment argument

Biden in his news conference addressed the possibility of using the 14th Amendment to continue US government borrowing in the absence of a deal, suggesting he has the power but not the time to utilize the unilateral action.

“I think we have the authority. The question is, could it be done and invoked in time that it could not – would not be appealed?” Biden asked, calling the question of whether an appeal could be solved before the default deadline “unresolved.”

Pressed by CNN to clarify whether he thought he could invoke the 14th Amendment as a serious and tangible option, the president made clear that maneuver would not be successful given the short window remaining.

“We have not come up with unilateral action that could succeed in a matter of two weeks or three weeks. That’s the issue. So it’s up to lawmakers. But my hope and intention is to resolve this problem,” he said.

Republican Sen. Bill Cassidy of Louisiana said Sunday a potential invocation of the 14th Amendment would be a “dodge.”

“The president needs to show leadership. ‘OK, House Republicans, American people, you’re concerned about spending, I will meet you there. As opposed to finding a dodge that tries to work its way around,” Cassidy said.

Treasury Secretary Janet Yellen reiterated Sunday in an interview with NBC News that June 1 was a “hard deadline” for the US to raise the debt ceiling or risk defaulting on its obligations.

But Rep. Brian Fitzpatrick, a co-chair of the bipartisan Problem Solvers Caucus, said there may be some leeway.

“The June 1st date was probably, according to Secretary Yellen, the earliest possible date,” the Pennsylvania Republican told CBS News, adding that “we do have enough cash flow” to “pay the interest on our debt.”

“We’re going start to see the state tax revenues come in the second week of June, so I think we’re OK on that,” Fitzpatrick said.

Standoff lifts

Biden had originally planned to stop in Australia and Papua New Guinea after the G7 summit in Hiroshima, but he canceled those portions of the trip amid the debt ceiling talks.

On Saturday, Rep. Dusty Johnson, a McCarthy ally and chair of the centrist Main Street Caucus, confirmed that the White House had made an offer seeking to cap future spending at current levels, which Johnson called “unreasonable.”

“The paper that the White House provided was a major step backward. And it undermined all the progress that was made Wednesday and Thursday. … It has endangered negotiations,” the South Dakota Republican said.

On Sunday, McCarthy told reporters at the Capitol that GOP Reps. Garrett Graves of Louisiana and Patrick McHenry of North Carolina would begin conversations again with White House staff “so we can walk them through literally what we’ve been talking about.”

Before news broke of the talks resuming, McHenry told CNN that he was “not at all” optimistic a deal could come together.

“I’ve been pessimistic for a while, and something needs to change,” he said Sunday morning.

Graves said both sides had “made a lot of progress in understanding one another’s positions, in understanding red lines” and that the negotiators were closer than when they had started.

He said there were still discussions to be had over ancillary topics such as work requirements and permitting reform, but “the numbers are the baseline.”

“The speaker has been very clear: A red line is spending less money, and unless and until we’re there, the rest of it is really irrelevant,” the Louisiana Republican said.

This story and headline have been updated with additional developments.

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CNN’s Morgan Rimmer, Haley Talbot, Melanie Zanona, Aileen Graef and Jasmine Wright contributed to this report.