Debt limit agreement remains out of reach as McCarthy and Biden plan to meet again

(CNN) The countdown is on, the stakes are high — and there is still no agreement on the debt limit.

President Joe Biden and House Speaker Kevin McCarthy are scheduled to meet again Monday after a weekend of no progress in trying to reach an agreement to avoid the country’s first default.

Negotiations between the White House and the House GOP stalled and broke on Friday, and representatives from both sides spent most of the next two days criticizing one another while defending their own positions.

In a sign of a possible thaw, Biden and McCarthy spoke on the phone while the president was aboard Air Force One, returning to Washington after an abbreviated trip to Japan. McCarthy told reporters Sunday that the call was “productive.” But that came after Biden slammed Republicans at a press conference in Hiroshima, where he said he was unable to promise his world leaders gathered for the Group of Seven talks that the US would not become insolvent.

“I can’t guarantee they won’t force a default by doing something outrageous,” Biden said shortly before leaving for the United States.

It’s not uncommon for high-risk negotiations on Capitol Hill to falter and later bounce back, but the weekend deadlock highlighted the challenge of finding consensus between the two sides as key sticking points remain.

Time is running out to raise the country’s borrowing limit and the US could default as soon as June 1, the Treasury Department warned, a position Treasury Secretary Janet Yellen reiterated on Sunday. Failure by lawmakers and the White House to reach an agreement would likely trigger a global economic disaster.

On Sunday, McCarthy told reporters at the Capitol that Republican Representatives Garret Graves of Louisiana and Patrick McHenry of North Carolina would resume talks with White House officials “so we can literally explain to them what we were talking about.”

If an agreement is reached, there will still be major challenges in successfully passing it through the House and Senate.

Legislation needs to be drafted, which can be tedious and complicated work as legislators and staff deal with the smallest of policy details — and can often lead to further problems with the fine print.

Then the leaders of both parties must fight for the votes to pass a bill, no easy task with narrow majorities in both chambers.

In addition, there are fewer and fewer days left on the calendar until June 1st.

McCarthy said it would take the House of Representatives four days to pass the legislation. In the Senate, opponents of a deal could cause a delay of several days through a filibuster. But both chambers are able to shorten the deadlines if necessary.

House Republicans are demanding federal spending cuts in exchange for their support for raising the debt ceiling. On Sunday, Biden acknowledged a “significant” disagreement with Republicans, stressing that while he is willing to cut spending, tax revenues are “not off the table” under the deal.

Graves, who is leading the GOP debt ceiling negotiations, earlier this month outlined four areas where he thinks agreement could be reached: overhauling the permitting process, recovering unspent Covid aid funds, tightening labor requirements for some government aid programs and limit spending.

Republicans have long insisted they won’t raise the debt limit without spending cuts, but Democrats have sounded the alarm about the cuts Republicans want.

Sources familiar with the White House mindset admit that one reason talks were temporarily halted on Friday is that White House negotiators find the magnitude of spending cuts demanded by House Republicans unacceptable, though the White House has expressed its willingness to cut some spending.

The budget proposal put forward by GOP negotiators over the weekend would set budget caps for six years, with the cap structure remaining the same as the bill passed by the House of Representatives 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 the original bill: immigration rules and additional changes to labor requirements for food stamps, the source said.

Biden said Sunday that much of what Republicans have proposed is “just, quite frankly, unacceptable.”

Changing work requirements have become a contentious issue. Some Democrats have expressed concern about Republicans’ proposed tightening of labor requirements for social safety net programs, with some leading Democrats saying including the requirements is a red line in the negotiations. Biden has stated that he will not put any resulting work requirements on the table for negotiations.

Democrats are also pushing for the debt ceiling to be extended by at least two years so they don’t have to revisit the issue before the 2024 election. The length of the extension — as with most of the items that are part of the talks — has not yet been determined, according to a source trusted.

CNN’s Kevin Liptak, Betsy Klein, Melanie Zanona, Phil Mattingly, Arlette Saenz, Maegan Vazquez, and Jeremy Diamond contributed to this report.

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