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Debt limit deal 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 debt limit agreement.

President Joe Biden and Speaker of the House Kevin McCarthy They are scheduled to meet again on Monday.after a weekend notable for its lack of progress in trying to reach an agreement to avoid the country’s first debt default.

Negotiations between the White House and the House Republican Party have stalled and they went on hiatus on Friday, with representatives from each side spending most of the next two days criticizing the other 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, heading back to Washington after a short trip to japan. McCarthy told reporters Sunday that the call was “productive.” But that came after Biden harshly criticized Republicans at a news conference in Hiroshima, where he said he could not promise world leaders gathered for the Group of Seven talks that the United States would not renege.

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

It’s not uncommon for high-stakes negotiations on Capitol Hill to experience setbacks and then bounce back, but the weekend’s downside underscored the challenge of finding consensus between the two sides as key points of contention remain.

Time is running out to raise the nation’s borrowing limit and the US could default as soon as June 1, The Treasury Department has warned, a position repeated on Sunday by Secretary of the Treasury, Janet Yellen. If lawmakers and the White House can’t come to an agreement, a global economic catastrophe is likely.

Congress Chronology

On Sunday, McCarthy told reporters on Capitol Hill that Republican Reps. Garrett Graves of Louisiana and Patrick McHenry of North Carolina would start talks again with White House staff “so that we can literally explain to them what we’ve been talking about.”

If and when a deal is reached, there will still be great challenges ahead to successfully pass it through the House and Senate.

Legislative text will need to be drafted, which can be hard and complicated work as legislators and staff get bogged down in the nitty-gritty details of the policy, and can often lead to more issues related to the fine print.

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

On top of all that, there are a dwindling number of days on the calendar before June 1.

McCarthy said the House would need 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 capable of speeding up deadlines when necessary.

Key sticking points and possible areas of consensus

House Republicans are seeking spending cuts in the federal budget in exchange for their support for raising the debt ceiling. On Sunday, Biden acknowledged a “significant” disagreement with Republicans, insisting that while he is willing to cut spending, “tax revenue is not off the table” as part of the deal.

Graves, who is leading the GOP negotiations on the debt ceiling, earlier this month outlined four areas where he thought there could be agreement: revising the permitting process, recovering unspent Covid relief funds, reinforcing work requirements for some government assistance programs and limit spending.

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

Sources familiar with White House thinking acknowledge that part of the reason for the temporary halt in talks on Friday is that White House negotiators find the scope of the spending cuts that House Republicans are pushing unacceptable. although the White House has expressed its willingness to cut some spending

The budget proposal that Republican negotiators presented over the weekend would set budget caps for six years, and the cap structure would stay the same as the bill passed by the House at fiscal year 2022 levels, according to a source with direct knowledge of the matter.

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

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

Changes in job requirements have become a contentious issue. Some Democrats have raised concerns about the Republican-proposed enhancement of labor requirements for social safety net programs, and some Democratic leaders have suggested that the inclusion of the requirements is a red line in the negotiations. Biden has said he would not put consistent job requirements on the table for negotiations.

Democrats are also pushing for a minimum two-year debt limit extension so they don’t have to grapple with the issue again before the 2024 election. part of the talks, has not been finalized, according to a source familiar.

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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