President Joe Biden answers questions on the U.S. debt limits ahead of a bilateral meeting with Australia's Prime Minister Anthony Albanese on the sidelines of the G7 Summit in Hiroshima, Japan, Saturday, May 20, 2023. (AP Photo/Susan Walsh) The U.S. Capitol is seen on Saturday, May 20, 2023, in Washington. President Joe Biden’s administration is reaching for a deal with Republicans led by House Speaker Kevin McCarthy as the nation faces a deadline as soon as June 1 to raise the country's borrowing limit, now at $31 trillion, to keep paying the nation’s bills. Republicans are demanding steep spending cuts the Democrats oppose. (AP Photo/Jose Luis Magana) The U.S. Capitol is seen on Saturday, May 20, 2023, in Washington. President Joe Biden's administration is reaching for a deal with Republicans led by House Speaker Kevin McCarthy as the nation faces a deadline as soon as June 1 to raise the country's borrowing limit, now at $31 trillion, to keep paying the nation's bills. Republicans are demanding steep spending cuts the Democrats oppose. (AP Photo/Jose Luis Magana) President Joe Biden speaks during a news conference in Hiroshima, Japan, Sunday, May 21, 2023, following the G7 Summit. (AP Photo/Susan Walsh) President Joe Biden gestures as he speaks during a news conference in Hiroshima, Japan, Sunday, May 21, 2023, following the G7 Summit. (AP Photo/Susan Walsh) President Joe Biden speaks during a news conference in Hiroshima, Japan, Sunday, May 21, 2023, following the G7 Summit. (AP Photo/Susan Walsh) President Joe Biden gestures during a news conference in Hiroshima, Japan, Sunday, May 21, 2023, following the G7 Summit. (AP Photo/Susan Walsh) President Joe Biden reacts as he leaves a news conference in Hiroshima, Japan, Sunday, May 21, 2023, following the G7 Summit. (AP Photo/Susan Walsh) Speaker of the House Kevin McCarthy, R-Calif., is joined by Republicans from the Senate and the House as he leads an event on the debt limit negotiations, at the Capitol in Washington, Wednesday, May 17, 2023. McCarthy and President Joe Biden have tasked a handful of representatives to try and close out a final deal. (AP Photo/J. Scott Applewhite, File) The U.S. Capitol is seen on Saturday, May 20, 2023, in Washington. President Joe Biden's administration is reaching for a deal with Republicans led by House Speaker Kevin McCarthy as the nation faces a deadline as soon as June 1 to raise the country's borrowing limit, now at $31 trillion, to keep paying the nation's bills. Republicans are demanding steep spending cuts the Democrats oppose. (AP Photo/Jose Luis Magana) U.S. President Joe Biden speaks during a news conference following the Group of Seven (G7) leaders' summit in Hiroshima, western Japan Sunday, May 21, 2023. (Kiyoshi Ota/Pool Photo via AP) U.S. Treasury Secretary Janet Yellen takes questions from journalists during a press conference, at the G7 meeting of Finance Ministers and Central Bank Governors, at Toki Messe in Niigata, Japan, Thursday, May 11, 2023. (AP Photo/Shuji Kajiyama, Pool, File) Speaker of the House Kevin McCarthy, R-Calif., speaks with members of the press after participating in a phone call on the debt ceiling with President Joe Biden, Sunday, May 21, 2023, on Capitol Hill in Washington. (AP Photo/Patrick Semansky) The U.S. Capitol is seen in Washington, Sunday, May 21, 2023. President Joe Biden planned on Sunday to speak directly with House Speaker Kevin McCarthy, hoping to salvage talks to raise the debt limit that have stalled in recent days while he was abroad at the Group of Seven summit. (AP Photo/Patrick Semansky) Speaker of the House Kevin McCarthy, R-Calif., speaks with members of the press after participating in a phone call on the debt ceiling with President Joe Biden, Sunday, May 21, 2023, on Capitol Hill in Washington. (AP Photo/Patrick Semansky) Speaker of the House Kevin McCarthy, R-Calif., walks in the Capitol Rotunda on Capitol Hill in Washington, Sunday, May 21, 2023. (AP Photo/Patrick Semansky) Speaker of the House Kevin McCarthy, R-Calif., speaks with members of the press after participating in a phone call on the debt ceiling with President Joe Biden, Sunday, May 21, 2023, on Capitol Hill in Washington. Standing at right with McCarthy is Rep. Garret Graves, R-La., McCarthy's top mediator in the debt limit talks. (AP Photo/Patrick Semansky) Speaker of the House Kevin McCarthy, R-Calif., speaks with members of the press after participating in a phone call on the debt ceiling with President Joe Biden, Sunday, May 21, 2023, on Capitol Hill in Washington. (AP Photo/Patrick Semansky) Speaker of the Kevin McCarthy, R- Calif., walks out of his office to speak with members of the press after participating in a phone call on the debt ceiling with President Joe Biden, Sunday, May 21, 2023, on Capitol Hill in Washington. Walking behind McCarthy is Rep. Garret Graves, R-La., McCarthy's top mediator in the debt limit talks. (AP Photo/Patrick Semansky) President Joe Biden walks up the steps of Air Force One at Marine Corps Air Station Iwakuni in Iwakuni, Japan, Sunday, May 21, 2023. Biden is heading back to Washington after attending the G7 Summit in Hiroshima, Japan. (AP Photo/Susan Walsh) Speaker of the House Kevin McCarthy, R-Calif., walks in the Capitol Rotunda on Capitol Hill in Washington, Sunday, May 21, 2023. (AP Photo/Patrick Semansky) Speaker of the House Kevin McCarthy, R-Calif., speaks with members of the press after participating in a phone call on the debt ceiling with President Joe Biden, Sunday, May 21, 2023, on Capitol Hill in Washington. Standing with McCarthy is Rep. Garret Graves, R-La., McCarthy's top mediator in the debt limit talks. (AP Photo/Patrick Semansky) U.S. President Joe Biden speaks during a news conference following the Group of Seven (G7) leaders' summit in Hiroshima, western Japan Sunday, May 21, 2023. (Kiyoshi Ota/Pool Photo via AP) President Joe Biden walks down the steps of Air Force One at Andrews Air Force Base, Md., late Sunday, May 21, 2023, after returning from the G7 Summit in Hiroshima, Japan. Biden returned early from his foreign trip to work on negotiations on the debt limit. (AP Photo/Susan Walsh) Air Force One, front, with President Joe Biden onboard, and a support plane, behind, sit on the tarmac at Elmendorf Air Force Base in Anchorage, Alaska, Sunday, May 21, 2023, during a refueling stop. Biden is returning to Washington following his trip to the G7 Summit in Hiroshima, Japan. (AP Photo/Susan Walsh) President Joe Biden walks on the South Lawn of the White House after stepping off Marine One, late Sunday, May 21, 2023, in Washington. Biden returned to Washington after participating in the G7 summit in Japan. (AP Photo/Patrick Semansky)
WASHINGTON (AP) — The White House and House Republicans wrapped up another round of debt ceiling talks Sunday as Washington races to strike a budget compromise along with a deal to raise the nation's borrowing limit and avert an economy-wrecking federal default.
President Joe Biden and House Speaker Kevin McCarthy spoke by phone Sunday while the president was returning home on Air Force One after the Group of Seven summit in Japan. They plan to meet Monday at the White House.
“It went well, we’ll talk tomorrow,” Biden said of the phone call as he arrived back in Washington late in the evening.
Upbeat, McCarthy, R-Calif., told reporters at the Capitol that the call was “productive" and that the on-again, off-again negotiations between his staff and White House representatives are focused on spending cuts.
Negotiators for the Democratic president and Republican speaker met for 2 1/2 hours at the Capitol as talks appear to be narrowing on a 2024 budget year cap that would be key to resolving the standoff. “We'll keep working,” said Steve Ricchetti, counselor to the president, as the White House team exited. The Republicans were not seen leaving the speaker's office and offered no immediate comment after the talks.
They all face a deadline, as soon as June 1, when the government could run out of cash to pay its bills. Treasury Secretary Janet Yellen said Sunday that June 1 is a “hard deadline.”
McCarthy said after his call with Biden that “I think we can solve some of these problems if he understands what we’re looking at." The speaker added, "But I’ve been very clear to him from the very beginning. We have to spend less money than we spent last year.”
McCarthy emerged from that conversation sounding optimistic and was careful not to criticize Biden's trip, as he had before. He did caution, “There’s no agreement on anything.”
“We’re looking at, how do we have a victory for this country?" McCarthy said. He said he did not think the final legislation would remake the federal budget and the country's debt, but at least “put us on a path to change the behavior of this runaway spending.”
The White House confirmed the Monday meeting and late Sunday talks but did not elaborate on the leaders' call.
Earlier, Biden used his concluding news conference in Hiroshima, Japan, to warn House Republicans that they must move off their “extreme positions” over raising the debt limit and that there would be no agreement to avoid a catastrophic default only on their terms.
Biden said “it's time for Republicans to accept that there is no deal to be made solely, solely, on their partisan terms.” He said he had done his part in attempting to raise the borrowing limit so the government can keep paying its bills, by agreeing to significant cuts in spending. “Now it’s time for the other side to move from their extreme position."
Biden had been scheduled to travel from Hiroshima to Papua New Guinea and Australia, but cut short his trip in light of the strained negotiations with Capitol Hill.
Even with a new wave of tax revenue expected soon, perhaps giving both sides more time to negotiate, Yellen said on NBC’s “Meet the Press” that "the odds of reaching June 15, while being able to pay all of our bills, is quite low.”
GOP lawmakers are holding tight to demands for sharp spending cuts with caps on future spending, rejecting the alternatives proposed by the White House for reducing deficits in part with revenue from taxes.
Republicans want to roll back next year's spending to 2022 levels, but the White House has proposed keeping 2024 the same as it is now, in the 2023 budget year. Republicans initially sought to impose spending caps for 10 years, though the latest proposal narrowed that to about six. The White House wants a two-year budget deal.
A compromise on those topline spending levels would enable McCarthy to deliver for conservatives, while not being so severe that it would chase off the Democratic votes that would be needed in the divided Congress to pass any bill.
Top Republican negotiator Rep. Garret Graves of Louisiana, speaking alongside McCarthy at the Capitol, said the numbers “are the foundation” of any agreement.
Republicans also want work requirements on the Medicaid health care program, though the Biden administration has countered that millions of people could lose coverage. The GOP additionally introduced new cuts to food aid by restricting states’ ability to waive work requirements in places with high joblessness. That idea, when floated under President Donald Trump, was estimated to cause 700,000 people to lose their food benefits.
GOP lawmakers are also seeking cuts in IRS money and, by sparing Defense and Veterans accounts from reductions, would shift the bulk of spending reductions to other federal programs.
The White House has countered by keeping defense and nondefense spending flat next year, which would save $90 billion in the 2024 budget year and $1 trillion over 10 years.
All sides have been eyeing the potential for the package to include a framework that would speed energy project developments.
And despite a push by Republicans for the White House to accept parts of their proposed immigration overhaul, McCarthy indicated the focus was on the House's previously approved debt and budget package.
“I think that we can reach an agreement,” Biden said, though he added this about Republicans: “I can’t guarantee that they wouldn’t force a default by doing something outrageous.”
Republicans had also rejected various White House revenue proposals. Among the proposals the GOP objects to are policies that would enable Medicare to pay less for prescription drugs. Republicans also have refused to roll back Trump-era tax breaks on corporations and wealthy households as Biden’s own budget has proposed.
For months, Biden had refused to engage in talks over the debt limit, contending that Republicans in Congress were trying to use the borrowing limit vote as leverage to extract administration concessions on other policy priorities.
But with the June 1 potential deadline looming and Republicans putting their own legislation on the table, the White House launched talks on a budget deal that could accompany an increase in the debt limit.
Biden's decision to set up a call with McCarthy came after another start-stop day with no outward signs of progress.
The president tried to assure leaders attending the meeting of the world’s most powerful democracies that the United States would not default. U.S. officials said leaders were concerned, but largely confident that Biden and American lawmakers would resolve the crisis.
The president, though, said he was ruling out the possibility of taking action on his own to avoid a default. Any such steps, including suggestions to invoke the 14th Amendment as a solution, would become tied up in the courts.
“That’s a question that I think is unresolved," Biden said, adding he hopes to try to get the judiciary to weigh in on the notion for the future.
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Miller and Boak reported from Hiroshima, Japan. Associated Press writers Lisa Mascaro, Farnoush Amiri, Colleen Long and Will Weissert contributed to this report.
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