By Richard Cowan and Katharine Jackson
WASHINGTON, May 10 (Reuters) - Talks on raising the U.S.
federal government's $31.4 trillion debt ceiling enter a new
phase on Wednesday, after Democratic President Joe Biden and top
congressional Republican Kevin McCarthy's first negotiating
meeting in three months.
Time is tight to avoid a historic and economically
destabilizing default, which the Treasury Department has warned
could come as soon as June 1, but some areas of potential
compromise emerged after Tuesday's White House meeting.
Biden signaled an openness to Republicans' demand to claw
back some unused money for COVID relief, which is less than $80
billion. House of Representatives Speaker McCarthy told
reporters that Biden also indicated a willingness to work on
speeding up permitting for energy projects, a goal that went
unmet in 2022.
The White House has previously supported that idea.
Aides for Biden, McCarthy, top Democratic Senate Majority
Leader Chuck Schumer, top Senate Republican Mitch McConnell and
top House Democrat Hakeem Jeffries were to begin meeting daily,
with another meeting planned on Friday, both sides said.
"Default is not an option," Biden told reporters after
Tuesday's meeting. "I told congressional leaders I'm prepared to
begin a separate discussion about my budget."
Biden and opposition Republicans have been locked in a
standoff for months over the debt ceiling, with Democrats
calling for a "clean" increase without conditions to pay debts
resulting from spending and tax cuts approved by Congress.
House and Senate Republicans, meanwhile, have said they will
not authorize any additional borrowing without an agreement to
cut spending.
McCarthy estimated that the two sides had as little as two
weeks to reach a deal that could then be passed by Congress.
"I would hope he would be willing to negotiate for the next
two weeks so that we can solve this problem," McCarthy said.
Adding to the urgency, Biden is scheduled to leave on May 18
to attend an annual meeting of the leaders of "Group of Seven"
major industrialized nations, though he said he would cancel
that trip if needed to avoid default.
"If somehow we got down to the wire and we still hadn't
resolved this ... I would not go. I would stay until this gets
finished," Biden said.
But even if there is significant progress, the House and
Senate each have their own, often time-consuming procedures for
advancing legislation that opponents of any deal could use to
slow things down.
Few countries in the world have debt ceiling laws, and
Washington's periodic lifting of the borrowing limit merely
allows it to pay for spending Congress has already authorized.
Wall Street executives who have advised the U.S. Treasury's
debt operations for the past 25 years warned on Tuesday they
were "deeply concerned" about the debt limit impasse, which has
markets worried about a U.S. default on payment obligations.
The last time the nation got this close to default was in
2011 - also with a Democratic president and Senate with a
Republican-led House.
(Reporting by Richard Cowan and Katharine Jackson; Additional
reporting by Moira Warburton; Editing by Scott Malone)
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