What to Know in Washington: McCarthy Sees Deal on Debt Possible

House Speaker Kevin McCarthy said he’s hopeful he can strike a deal on raising the debt limit with President Joe Biden well before the deadline when the nation would no longer be able to pay its bills.

The California Republican emerged from a private meeting with Biden on Wednesday and sought to tamp down concerns that a stalemate could push the government to the edge of a default. He said the discussion went better than he expected.

“I think, at the end of the day, we can find common ground,” McCarthy said as he left the White House.

Photographer: Al Drago/Bloomberg

But he also reiterated GOP demands for spending cuts and said he was aiming for a two-year agreement. “We don’t have a revenue problem we have a spending problem,” he said. He added that an increase in the debt limit without an agreement on spending is “not going to happen,” Josh Wingrove and Erik Wasson report.

Biden and McCarthy followed similar, winding paths to find themselves back at a familiar point: staring out over the brink of a debt ceiling crisis.

The two men, neither strangers nor friends, sat under a portrait of Franklin Delano Roosevelt during their meeting — a president Biden admires and one whose Depression-era New Deal gave rise to an expansion of government programs.

In a few months, the US will come to the end of its credit limit and the ability to make good on its obligations. The question between now and then is whether Biden is willing to cut a deal on spending to raise the debt limit — and will McCarthy be able to deliver on any agreement he makes.

The duo’s interactions over the next several months will have a significant impact on the economy and, by extension, their political futures. Wingrove, Wasson and Billy House examine how they’re dynamic will play into negotiations.

Federal Reserve Chair Jerome Powell warned against any assumption that the central bank can rescue the economy if Congress fails to raise the federal debt ceiling — a move that could force the Treasury into a payments default. Read more.

Also Happening on the Hill

CONGRESS’ SCHEDULE

• The House returns at 9:30 a.m. to vote on a resolution to pull Rep. Ilhan Omar (D-Minn.) from the Foreign Affairs Committee.
• Senators meet at 10 a.m. to consider a US Institute of Peace nomination, and may take up an organizing resolution.

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Elections, Politics & Probes

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Jones Day Won’t Advise Trump in 2024 White House Campaign

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Around the Administration

BIDEN’S AGENDA

• The president at 8 a.m. delivers remarks at the National Prayer Breakfast in Washington, D.C. He then returns to the White House to have lunch with King Abdullah II of Jordan and Crown Prince Hussein at noon.
• At 2:15 p.m. Biden and Vice President Kamala Harris deliver remarks at the White House on the 30th anniversary of the Family and Medical Leave Act.
• Biden and Harris at 4:30 p.m. meet with Congressional Black Caucus members in the Oval Office.
• At 12:45 p.m. White House Press Secretary Karine Jean-Pierre gives a briefing.

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White House staff, the US Postal Service, and other agencies declined multiple Bloomberg Government requests for information on the program for nearly a year.

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The US keeps saying it wants to set a “floor” under the relationship with China. Its recent moves against Beijing and new pressure from Congress make achieving that look increasingly unlikely.

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To contact the reporters on this story: Brandon Lee in Washington at blee@bgov.com; Michaela Ross in Washington at mross@bgov.com

To contact the editor responsible for this story: Giuseppe Macri at gmacri@bgov.com