White House, Republicans trade barbs as debt talks paused

White House, Republicans trade barbs as debt talks paused

By Moira Warburton and Timothy Gardner

WASHINGTON (Reuters) - President Joe Biden's administration and congressional Republicans traded barbs on Saturday over raising the federal $31.4 trillion debt ceiling, with both sides casting the other's proposals as too extreme.

Officials did not meet on Saturday, after two meetings ended on Friday with no progress cited by either side and negotiators saying they were not sure when fresh talks would take place.

There are less than two weeks before June 1, when the U.S. Treasury Department has warned that the federal government could be unable to pay all its debts. That would trigger a default that could cause chaos in financial markets and spike interest rates.

White House Press Secretary Karine Jean-Pierre noted in a statement that Biden and Republican House of Representatives Speaker Kevin McCarthy had agreed that any budget agreement would need to be bipartisan and accused Republicans of offering proposals too far to the right to pass Congress.

Biden told his team to schedule a call on the debt limit with McCarthy later on Sunday, according to a White House official.

Biden sought the meeting after being briefed by his team in Japan, where he is traveling to participate in the Group of 7 (G7) meetings.

Late Saturday afternoon, McCarthy told reporters at the Capitol that he did not think talks could move forward until Biden was back in the country from the G7 meeting in Japan. He accused Democrats of taking a position that was too extreme toward the left.

"Unfortunately, the White House moved backwards," McCarthy said, adding that the "socialist wing" of the Democratic Party appeared to be in control.

McCarthy's office did not immediately respond to a request for comment on the White House statement.

McCarthy's Republican-led House last month passed legislation would cut a wide swath of government spending by 8% next year. Democrats say that would force average cuts of at least 22% on programs like education and law enforcement, a figure top Republicans have not disputed.

DIVIDED CONGRESS

Republicans hold a slim majority of seats in the House and Biden's fellow Democrats have narrow control of the Senate, so no deal can pass without bipartisan support.

A source familiar with the negotiations said Republicans had proposed an increase in defense spending, while cutting overall spending. The source also said House Republicans want to extend tax cuts passed under former President Donald Trump, which would add $3.5 trillion to the federal debt.

The source said the Biden administration had proposed keeping non-defense discretionary spending flat for the next year, which would cut spending when adjustments are made for inflation.

U.S. Representative Patrick McHenry, a Republican negotiator, had said Republicans leaders were "going to huddle as a team and assess" where things stood. He did not comment on whether there would be talks on Sunday.

Republicans are pushing for sharp spending cuts in many domestic programs in exchange for the increase in the government's self-imposed borrowing limit, which is needed regularly to cover costs of spending and tax cuts previously approved by lawmakers.

Congressional Republicans voted to raise the debt ceiling three times, with no budget cut pre-conditions, when Republican President Donald Trump was in the White House.

(Reporting by Timothy Gardner, Moira Warburton, Jason Lange and David Shepardson; writing by Timothy Gardner and Patricia Zengerle; Editing by Nick Zieminski, Richard Chang and Lisa Shumaker)