President Biden and top congressional leaders on Thursday postponed a second meeting on the debt limit crisis to give staff members more time to explore a budget deal before the two sides convened again.
People familiar with the decision cast the move as a positive development. Preliminary budget talks among senior White House officials and congressional aides have been underway for two days, with both sides attempting to find a path to an agreement on lifting the government’s debt limit and avoiding a default.
Mr. Biden and the four top congressional leaders, including Speaker Kevin McCarthy, were originally scheduled to meet again Friday after an initial face-to-face session on Tuesday produced no agreement. A new meeting is expected next week before Mr. Biden departs on Wednesday for Japan to attend the Group of 7 leaders meeting.
The delay seems to suggest progress at a pivotal moment. Until now, both sides appeared dug in on their respective positions about what it would take to raise the nation’s debt limit, which caps how much money the United States can borrow. That $31.4 trillion limit was hit on Jan. 19, and the Treasury Department has been using accounting maneuvers to keep paying America’s bills without breaching that debt ceiling.
Mr. McCarthy has insisted on deep spending cuts and a rollback of Mr. Biden’s clean energy agenda as a prerequisite to raising the debt limit. Mr. Biden has insisted that Republicans raise the borrowing cap, arguing it simply allows the United States to pay bills that Congress has already approved.
House Republicans who have been pressing the White House and Senate Democrats to negotiate said on Thursday that the opening of discussions about spending limits and other proposals was spurring some optimism that an agreement could be reached before June 1.
“The last 48 hours have given us some more reason for hope,” said Representative Dusty Johnson, Republican of South Dakota and the leader of the Main Street Caucus, an influential group of mainstream conservatives.
Still, Mr. McCarthy downplayed the bargaining sessions, saying that with a June 1 deadline looming for a possible default, the pace was not fast enough.
“We have a short time period,” Mr. McCarthy told reporters on Thursday. “If this were staff meetings happening on Feb. 1, I’d call them productive. When you are sitting here with a few, 15 days to go, it really seems to me that the president finally felt the pressure for 100 days of not having a meeting with me.”
In the wake of Tuesday’s White House session, Biden administration representatives and congressional leadership offices have gathered in closed meetings on Capitol Hill to exchange ideas on a potential spending and policy deal.
Congressional officials said it made sense to put off the higher-level meeting since Mr. Biden and congressional leaders would have little new to discuss so quickly after their last discussion. Among the concerns were that another meeting with little progress to report would sow doubts about Washington’s ability to prevent an economically devastating default.
Both sides have continued to talk this week and people familiar with the discussion, which ran about two hours each on Wednesday and Thursday, said some broad areas of negotiation had emerged, including fixed caps on federal spending, reclaiming unspent funds designated for the Covid emergency, stiffer work requirements for federal benefits and expedited permitting rules for energy projects.
The negotiations between Biden administration and congressional staff members, which Mr. Biden and Mr. McCarthy announced after the initial Tuesday meeting at the White House, represent a new frontier in the discussions over raising the debt limit. The talks are effectively an early version of annual budget discussions, which usually heat up in late summer. Given Mr. Biden’s pledge to not negotiate over an increase in the debt limit, administration officials have taken pains to describe them as the normal course of business.
“That’s regular order,” White House spokeswoman Karine Jean-Pierre said Thursday, about the meetings. “That is something that has been done year after year to talk about appropriations.”
But the timing of the discussions — and the fact that any agreement they produce would almost certainly be included in a bipartisan bill to raise the debt limit ahead of a potential default as soon as next month — suggests Mr. Biden is negotiating over the debt limit despite the insistence that the two issues are separate.
The White House has sent staff members from the Office of Management and Budget and the National Economic Council to the talks, and the offices of the top two Democratic and Republican congressional leaders have dispatched aides with experience in fiscal policy and cutting major spending deals.
As a starting point, administration officials have rejected any agreement with Mr. McCarthy that rolls back Mr. Biden’s signature legislative achievements, most notably on climate change. They are insisting Republicans drop significant provisions in the debt limit bill that passed the House last month, including the repeal of most of Mr. Biden’s new tax incentives for clean energy.
On the narrower question of discretionary spending levels, administration officials are pushing for significantly smaller cuts than Republicans approved last month. They want shorter-term caps in spending than the decade-long caps in the Republican bill. And they want to base those caps off a higher spending level than Republicans do — the amount in this year’s government funding bill, which Mr. Biden signed in December. Republicans’ plan caps spending growth from the 2022 fiscal year.
White House negotiators have also pushed to exclude consideration of Republican efforts to roll back funding for the Internal Revenue Service to crack down on tax cheats, as well as for work requirements for Medicaid and food stamp recipients.
The duration of a debt limit increase is also emerging as a line in the sand, with the White House insisting on a higher increase than Republicans have floated. Both sides could agree to raise the limit for only a couple of months as they seek to finish budget negotiations. But Mr. Biden’s aides want to avoid such a short-term solution and do not want to conduct an entirely new round of negotiations next year. As a result, any larger budget deal would likely need to raise the limit for borrowing needs past the next presidential election, instead of into early next year, as the Republican bill did.
Republicans acknowledge that the White House has laid down numerous red lines but say that the president will have to relent in some areas if an agreement is to be struck.
“None of us, nobody in this room, thinks Joe Biden will get everything he wants in this deal,” said Mr. Johnson. “That means by definition he will have to accept a number of things he says he refuses to accept.”
“We’re not going to negotiate with ourselves,” said Representative Garret Graves, a Louisiana Republican deputized by Mr. McCarthy to shepherd Republicans through the debt ceiling showdown. “We’re going to have substantial savings moving forward.”
Biden administration officials are also open to striking a deal with Republicans on accelerating permitting for a wide range of energy projects, including wind, oil, gas and solar — a top priority of Senator Joe Manchin III, Democrat of West Virginia.
Any final agreement would need the endorsement of both Mr. Biden, Mr. McCarthy and Senate Democrats, and final approval would most likely need to be bipartisan since many of the hard-right House conservatives who voted for the House debt limit increase said they would not support anything less than what the House passed.
Officials also hope a final agreement could win approval from business groups, adding pressure on Republicans. Such concerns prompted U.S. Chamber of Commerce officials this month to outline potential paths to a debt limit deal.