Biden to meet with congressional leadership again on Friday as threat of national debt default looms

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By Maegan Vazquez, CNN

(CNN) -- President Joe Biden and top congressional leadership will meet again on Friday after they emerged from their hour-long meeting in the Oval Office on Tuesday with little to show that they're moving toward a deal to raise the debt ceiling and avoid a default that would have catastrophic economic consequences.

House Republicans want to attach spending reductions to a debt ceiling increase and have passed a debt limit plan that does just that. But Biden and congressional Democrats have insisted on passing a clean increase on the debt limit before addressing a framework for spending.

Although expectations for the meeting were low, House Speaker Kevin McCarthy told reporters that he didn't see any new movement since his last meeting with the president to discuss the matter in February.

"I would hope that he'd be willing to negotiate for the next two weeks so we could actually solve this problem and not take America on the brink," McCarthy said outside the West Wing following the meeting.

The California Republican said he asked the president for areas where he'd engage on spending reductions, but "he wouldn't give me any."

Speaking alongside McCarthy, Senate Minority Leader Mitch McConnell attempted to assuage fears of a default, stating that "the United States is not going to default. It never has and it never will. However, elections have consequences. We now have divided government. We didn't have a divided government last year."

However, McCarthy would not offer concrete assurances about preventing default.

"I'm speaker of the House," he said. "I'm not the leader of the Senate. I'm not the president ... I've done everything in my power to make sure it will not default. We have passed a bill that raised the debt limit. Now, I haven't seen that in the Senate."

"So," the speaker continued, "I don't know."

House Minority Leader Hakeem Jeffries and Senate Majority Leader Chuck Schumer also told reporters outside the White House that McCarthy was the only leader in the meeting who would not take default off the table.

"Instead of (McCarthy) giving us a plan to remove default, he gave us a plan to take default hostage and that is a shame, because that makes things more complicated," Schumer said.

Jeffries said that the meeting attendees are organizing their respective teams "to have a discussion about a path forward around the budget and the appropriations process, and everyone agreed."

"That's progress," he added.

Officials had indicated Biden's goal for the meeting was to move spending negotiations onto a separate track, removing the threat of default while giving Republicans assurances he will engage in good-faith negotiations about federal spending.

Tuesday's meeting -- comprised of the four congressional leaders as well as a handful of congressional and White House aides -- marked the first in-person, top-level discussions on the matter at the White House in months.

Biden had not formally held a meeting with McCarthy since February, when the two last discussed the debt ceiling at the White House.

McCarthy has signaled opposition to a short-term debt limit lift. He also said that Congress will need deal in principle to lift debt limit by next week.

Heading into Tuesday's meeting, McCarthy had more leverage than many expected him to have and House Republicans remain largely behind him.

"There isn't a single bright line or 'must have' that I am married to," South Dakota GOP Rep. Dusty Johnson, a key McCarthy ally, told CNN. "The totality of the deal has to make real and substantial change to how our country spends and borrows. There are lots of different ways to get there."

Many House Republicans believe the speaker has built trust within their ranks over the last several months -- a testament, they say, to a leader who barely clinched the speakership after a historic 15 rounds of voting.

A source close to McCarthy said the speaker -- after months of listening sessions and meetings -- feels comfortable with where his conference's hard lines and negotiable provisions lie. He's spent the last several days touching base with Republican members across the ideological spectrum and speaking with Louisiana GOP Rep. Garret Graves, who he selected to take lead as a policy adviser on this issue.

Asked what would be a victory in negotiations with the White House, North Dakota Republican Rep. Kelly Armstrong said, "Kevin getting us the best deal he can after the White House engages in good faith negotiations."

"I recognize what I want and what can get 60 votes in the Senate may not be the same," he added.

McConnell -- known as a Senate deal maker with stronger ties to Biden than McCarthy -- has signaled that he won't come to rescue Democrats in negotiations.

"The solution to this problem lies with two people, the president United States, who can sign a bill and deliver the members of his party to vote for it, and the Speaker of the House," McConnell told reporters after Tuesday's meeting. "There is no sentiment in the Senate -- certainly not 60 votes -- for a clean debt ceiling. So there must be an agreement and the sooner the president and the speaker can reach an agreement, the sooner we can solve the problem."

In the Senate, all but six Senate Republicans have vowed to oppose raising the debt ceiling "without substantive spending and budget reforms," backing McCarthy's position.

The US hit the debt ceiling set by Congress in January. That forced the Treasury Department to begin taking extraordinary measures to keep the government paying its bills. And Treasury Secretary Janet Yellen recently warned that the US could default on its obligations as soon as June 1 if Congress doesn't address the debt limit.

A breach of the US debt ceiling risks sparking a 2008-style economic catastrophe that wipes out millions of jobs and sets America back for generations, Moody's Analytics has warned. The impact could include delayed Social Security payments, late paychecks for federal employees and veterans and a direct hit to Americans' investments.

Stocks fell Tuesday morning as investors awaited updates on the debt ceiling and inflation.

Along with news about the White House, investors are also bracing for the April Consumer Price Index data due on Wednesday, which could give more clues into the Federal Reserve's planned trajectory in its fight against inflation.

This story and headline have been updated with additional developments.

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