Biden and McCarthy barely speak, darkening prospects for debt ceiling deal

WASHINGTON — Over the weekend after the stunning collapse of California’s Silicon Valley Bank, no one from the White House or the Biden administration called House Speaker Kevin McCarthy — the most influential politician in the Golden State as well as the strongest Republican in Congress.

McCarthy spoke with Federal Reserve Chairman Jerome Powell, as well as his committee chairs and his Democratic counterpart, Minority Leader Hakeem Jeffries of New York. And rather than wait for a phone call, McCarthy said he proactively called Treasury Secretary Janet Yellen. They ended up talking that Saturday, the first of “multiple” conversations, a Treasury spokesman said.

But he did not contact any senior White House official over the weekend as Silicon Valley Bank and then Signature Bank went bankrupt, raising fears contagion could spark a run on a wider bank. and a financial crash.

“I never had anybody from the White House contact me. Not a single person from the administration called me; I called them,” McCarthy told reporters last week during the annual House GOP retreat in Orlando.

The Biden administration scoffs at the idea that McCarthy is overlooked. Recent bank failures aside, an internal White House memo shows Biden reaching out to the House Republican leader again and again, calling him on his birthday and when he becomes president. On the contrary, the White House says Biden could be the rejected suitor: McCarthy did not visit the building once in 14 months in 2021-22, even though he had been invited several times, an official said. the White House. Overall, the White House invited McCarthy to visit more than 20 times; he came eight.

No one foresees major legislative breakthroughs in a time of divided government and heightened polarization. But when the President and Speaker of the House are barely on good terms, the more relevant question is whether they can avert a financial calamity. In the months ahead, Biden and McCarthy will need to find a compromise to keep the nation from defaulting on its debt, and in the fall they will need another deal to keep the government from shutting down.

At this stage, no meaningful negotiations are underway and no agreement is in sight. The deadline to avoid a catastrophic default, according to the Treasury Department, is June 5.

McCarthy and Republicans are demanding that deep spending cuts be tied to any increase in the debt ceiling – a position McCarthy accepted in order to win the support of the far-right Freedom Caucus to become president. Biden insisted on a net increase in debt, unrelated to spending cuts. Their first and only meeting at the White House took place on February 1 and resulted in no breakthrough; the two have not met to discuss the matter since.

At a St. Patrick’s Day luncheon at the Capitol, McCarthy said he pointedly asked Biden when the two could sit down and start negotiating. The president, seated next to him, responded with a familiar refrain, McCarthy recalled: Where’s the Republican budget?

At an Orlando resort last week, McCarthy’s growing frustration was evident. He complained to reporters that Biden was stubborn. And on Tuesday, McCarthy sent a letter to Biden, saying the president’s refusal to negotiate on “runaway spending” was jeopardizing the fragile economy.

The speaker insisted that Biden’s team contact by the end of the week to set up a meeting.

“[Y]We and your team have been completely absent from any meaningful follow-up to this rapidly approaching deadline,” McCarthy wrote, a message he reiterated in interviews with reporters later that day.

“Your position – if maintained – could prevent America from fulfilling its obligations and have disastrous consequences for the entire nation.”

McCarthy’s letter included a handful of broad ideas for tackling the $31.5 trillion national debt, including recovering unspent Covid funds, tightening work requirements for some government programs and reducing non-military spending at pre-inflationary levels. But his lack of detail also highlighted the fact that, weeks after Biden rolled out his spending plan, House Republicans have yet to unveil their own budget document for the next fiscal year.

In response to McCarthy’s letter, the White House dug in. Speaking to reporters on Tuesday before leaving North Carolina, where he had delivered a speech, Biden was asked if he planned to meet with McCarthy in case he did not present a budget proposal. .

“Well, I don’t know what we’re going to meet about,” Biden said.

Republicans said Biden’s emphasis on a GOP budget was about the political game since House Democrats did not produce a traditional budget while in office.

“The Democrats haven’t produced one in the last four years. They never got one through the budget committee. They would “consider” their budget each year. So now we have to have a Republican budget? asked Rules Committee Chairman Tom Cole, R-Okla., an appropriation official and close McCarthy ally. “That didn’t seem to stop President Biden when he was working with a Democratic Congress. He didn’t tell Nancy Pelosi, “I have to have your budget.” You have the majority. We need to see your budget now.

“So this is all just politics and political posturing, and it’s dangerous.”

The fact that Biden doesn’t appear to be in a rush to meet with McCarthy – three months ahead of a possible default – suggests the White House thinks it’s playing a much stronger role.

By keeping the speaker at arm’s length and repeatedly badgering him about the GOP’s failure to produce a budget plan, top Democrats say Biden is drawing attention to McCarthy’s tenuous hold on his leadership position. With just a five-seat majority, McCarthy is trying to appease both conservative bomb-throwers who demand drastic cuts and moderates in his conference who don’t want to see the schedules gutted.

Biden nodded to the president’s predicament during an appearance at a Democratic Senate meeting this month. McCarthy is in an interesting spot, Biden said, to laughter from lawmakers.

“We have the facts and the math on our side,” Pennsylvania Rep. Brendan Boyle, the budget committee’s top Democrat, said Tuesday. “But I’ve also always thought that given all the various promises that Kevin McCarthy has made to get elected president, it will be very difficult for him to come up with a budget that he could get 218 of his members to vote for. And the fact that we haven’t seen it yet, I think, reflects that reality.

A Republican on the budget committee, Rep. Ralph Norman, who initially opposed McCarthy’s candidacy and then later backed him, predicted that the various factions in the GOP conference would be able to come together on a budget, although he admitted it would not be easy.

“We are going to present a budget; we will present the case of the debt limit. Whether [Biden] shut down the government, it will be on the Biden administration — it will not be on us,” Norman said in an interview. There will be some gnashing of teeth, but that’s a good thing.