Debt Dilemma, Debate Deepen : The NPR Politics Podcast After cutting short his trip to Asia, President Biden returned to Washington to meet with Speaker of the House Kevin McCarthy (R-Calif.) to try and hash out terms over increasing the country's debt limit. Where are they finding common ground, and what still needs to be resolved?

This episode: political correspondent Susan Davis, reporter Barbara Sprunt, and national political correspondent Mara Liasson.

The podcast is produced by Elena Moore and Casey Morell. Our editor is Eric McDaniel. Our executive producer is Muthoni Muturi.

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Debt Dilemma, Debate Deepen

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MELANIE: Hi, this is Melanie in Big Sur, Calif., where I'm with a team from the Oregon Zoo watching some of the once-nearly-extinct California condors we raised soar above us.



MELANIE: This podcast was recorded at...

DAVIS: 11:43 a.m. on Monday, May 22.

MELANIE: Things may have changed by the time you hear this, but we'll still be in awe of this magnificent bird returning to our skies. OK, here's the show.



DAVIS: A wonderful achievement in a very beautiful place.

BARBARA SPRUNT, BYLINE: That's very nice.

DAVIS: Hey there. It's the NPR POLITICS PODCAST. I'm Susan Davis. I cover politics.

SPRUNT: I'm Barbara Sprunt. I cover Congress.

LIASSON: And I'm Mara Liasson, national political correspondent.

DAVIS: And high-stakes negotiations over raising the nation's debt limit continue this week. The U.S. government is getting closer to that X date, the day where the country doesn't have enough money to pay its bills and could default on its debt. Treasury Secretary Janet Yellen says that will happen sometime in early June. Speaker Kevin McCarthy and President Biden remain pretty far apart in negotiating a deal to avoid that default. So, Barbara, a lot of on-again, off-again developments over the weekend. Catch us up from what happened between Friday to this morning.

SPRUNT: Yes. And as I think about this, I'm like, OK, so today is Monday. So, yes, lots of starts and stop on the negotiating front. Remember, Speaker McCarthy and President Biden, along with other top congressional leaders, have now met twice on this, you know, at the White House. And they're separately having McCarthy's designated negotiators and some of President Biden's staff do, like, the main duking it out in terms of negotiating talks before the principals get together again, which McCarthy and Biden will do today.

There was a series of kind of toggling back and forth between everyone saying we're feeling very optimistic. Yes, it's early - you know, it's still early in negotiations and there's still a bit of distance, but we feel optimistic we're not going to default. And then you toggle that back and forth between a lot of statements from Biden and also from some of the GOP negotiators that said there's so much daylight between us. Like, we're in a bad situation. And, at some point, they walked away from the negotiations. So it's been an interesting and long 72 hours.

DAVIS: And the president and the speaker are set to meet again today.

SPRUNT: Yeah. So they had a conversation on the phone as Biden was traveling back from Japan, where he was for the G-7 yesterday. And McCarthy told us yesterday on the Hill that it was a productive call, that the two leaders decided that they would meet again on Monday. McCarthy said something twice in his remarks to us. He said, you know, he said he would meet in the morning, but, you know, he should probably sleep and rest after his trip and then we can meet. And I thought it was interesting 'cause, like, that's true, and everyone would want to do that and rest after, you know, a transpacific flight. But it did kind of have - to me, it felt a little bit - like, just enough of a dig. Like, let's let him sleep.

DAVIS: It does speak to the tone of the negotiations, too. So, Barbara, you know, I've covered a handful of these debt ceiling negotiations in my time, and there's a part of me that, you know, if you squint, you can sort of see the outlines of a deal. They're talking in the orbit of setting the discretionary spending limits for the government. There's things like clawing back money - unspent COVID funds that could be part of a deal, talk of permitting reform. That's pretty popular with some element of both parties that would make it easier for new oil and gas projects. Like, there's, like, the contours here. What are the sticking points? What is this daylight they're referring to that they just can't come to terms on?

SPRUNT: Yeah. Well, the big sticking point is spending. You know, McCarthy, for months, has pledged that, like, any bill that will pass, which - and we should say the House did pass a bill, a partisan bill, that would raise the debt ceiling. But he wants anything that raises the debt ceiling to be done in tandem with spending cuts. It's all about spending cuts. Garrett Grave (ph), a Republican congressman from Louisiana who's, like, McCarthy's top guy on the negotiating staff, he told us yesterday when we were staking out his office, if we don't adjust spending, which is McCarthy's biggest red line, what is even the point?

DAVIS: But, you know, Mara, President Biden has, for months, refused to engage in any kind of negotiations. The line from the White House was, you know, raise the debt limit and then we'll talk about spending. Then we'll talk about these other priorities. I'm not going to link them. But now they're linked, and he is negotiating with the speaker now. And did the president potentially misstep here? I mean, now we're back at this deadline. Everything's on the table, and it doesn't look like a deal is close at hand.

LIASSON: Well, I think the president miscalculated on a bunch of things. He keeps on thinking that the world is like it used to be, but Republicans in the House aren't like they used to be. There always was a face-saving off-ramp for these debt ceiling standoffs. But this time, there are a lot of Republicans - more than in any other debt ceiling standoff I can remember - who are talking about default as maybe it's worth it. Maybe it won't be so bad. You know, Donald Trump said Congress should let the country default. So I think the White House wasn't expecting that. They weren't expecting McCarthy, who came into office as a very weak speaker - they weren't expecting him to hold together his conference as well as he has. Also, they were surprised at the absence of corporate America and Wall Street. Where is the pressure from outside - from the business community coming on both sides, but particularly Republicans, 'cause they're their constituents - to make a deal? So I think on all those things, he miscalculated.

But in terms of the president's disadvantage here, he even talked about it in Japan. He said that he believes that Republicans think that it's politically advantageous for them to engineer a default because it would hurt the president because, as he says, a president is responsible for everything. Biden would take the blame, and that's one way to make sure Biden's not elected. So, you know, he comes into this with some weaknesses in his negotiating position.

DAVIS: And, Barbara, what about the speaker? I mean, the president did cut short this long-planned foreign trip to deal with the debt limit. They have brought him to the table to engage in these negotiations. Do you have a sense that the speaker feels like he can negotiate a deal that can win the support of his conference?

SPRUNT: There's two things here that I think are important. One, on the front of - you know, to the part of your question about winning support from that part of his conference, I think that it's entirely possible that he strikes a deal with the Biden administration that is a compromise deal that will not make House Freedom Caucus members happy.

DAVIS: Yeah. They're very hard to keep happy.

SPRUNT: They are hard to keep happy. And also, you know, I think this is a little bit about the dance of a negotiation. And I think, you know, similarly, like, we shouldn't just focus on the House Freedom Caucus members. I've talked to a lot of House progressives who have said that they're concerned that Biden may give away parts in this negotiation that they're going to be uncomfortable with and that they will not support. So you could definitely see a path forward where there's a compromise package that...

DAVIS: Makes everyone angry.

SPRUNT: You know, it would make neither, you know, the House Freedom Caucus members or House progressives particularly happy. The other point that I would add about Speaker McCarthy is I think he comes across this feeling pretty confident about his spot right now. He's driving the train, I think, in kind of the direction that he wants it to go. And I think it's important to remember that, you know, for months, we heard a refrain from the White House and from top congressional Democratic leaders - like, show us your plan, House Republicans. Like, you say you want to raise the debt ceiling in tandem with spending cuts. Well, where's your plan? And I think that they thought that he might not be able to pass a plan in his conference. And, lo and behold, that's exactly what happened. He united the conference. They passed a bill, and now he will tell you every day, as he's been telling us for days, we're the only ones who've done that.

LIASSON: Does he have a strategy? I mean, one of the things that's been interesting to me is that - the fact that the Republicans keep on upping their asks instead of trying to come to some kind of a compromise. In other words, did they really think that in divided government with a Democratic White House and a Democratic Senate, that they can insist on everything they passed in that bill and more?

SPRUNT: Well, it's interesting because I think that if you were to, a month ago, look at where we are right now, you would say, I can't believe it would have gotten to that place. I mean, he's been able to push the envelope here a bit further than I think a lot of members thought he'd be able to, much to the delight of, you know, his conference. You know, in terms of the tea leaves of what happens next, I mean, it's hard to know. But I think we're just in that sweet spot where the clock is really ticking. It's very much crunch time, and it's not an understatement to say there's anxiety here on Capitol Hill about getting a deal done. But it's not the night before. It's not 72 hours before. I think it's going to be really critical to see how the talks go between the speaker and the president.

DAVIS: All right. Let's take a quick break, and we'll talk more about this when we get back.

And we're back. And, Barbara, we were just discussing the speaker's role in this. And while, of course, this debt ceiling negotiation has a lot at stake for the country - a default could have any number of economic consequences - there's also a lot at stake here for the speaker as well. I mean, you were saying that at this moment in time, he feels confident. He's been able to unite the conference. But this needs to go well for the speaker.

SPRUNT: I mean, I will say one thing that stood out to me yesterday when he was talking to us was he said something like - he alluded to his own battle for the speakership earlier this year, which we all remember the 15 rounds of voting. And it was just day after day, lots of questions about his ability to lead the conference, the support that he would have. And he leaned into that yesterday in a comment to us where he said, you remember that. I didn't back down, and look where I am now and, you know, kind of don't underestimate me on this. I think he's aware this does have to go well for him. This is a big test for his speakership. But he's coming off confident, and I think we'll only see more of that coming out of today's meeting.

LIASSON: There's no doubt that he's come off stronger than people expected. But what I'm wondering is if he does have to pass something with a lot of Democratic votes or if some of the moderate Republicans even defect to support a discharge petition, something like that, does he come out actually a weaker speaker? For him to come out strong, he has to come out with something that most Republicans will vote for, right?

DAVIS: And that looks like a win for the party, right?

LIASSON: Yes. It has to look like a win. And it's hard to see what that is right now.

DAVIS: Mara, one of the things that's fascinating to me about this round of debt ceiling talks is in other high-stakes negotiations, probably most notably back in the Obama administration, what was at stake was so much higher. You know, at the time, it was talking about tax levels that would affect basically almost every American household. I mean, people had a direct connection to what was happening in Washington. And this round, it just seems like the pot of issues on the table seems relatively low-stakes.

LIASSON: And people don't care. Voters do not care about the debt ceiling. The programs that Republicans want to cut or add work requirements to affect low-income people only, and they've walled off Social Security, Medicare and Defense. The country might go into default over an argument over permitting reform and spending caps.

DAVIS: Yeah. Yeah.

LIASSON: Really?

DAVIS: Yeah. I mean, Barbara, you were also talking about - there's the Freedom Caucus component. There's the progressive component. Let's talk about the middle, where these deals tend to be struck. I mean, what is stopping a coalition of moderate Republicans who are in competitive races, who don't want to default, from jumping ship, from saying, you know, we'll vote with Democrats to raise the debt limit if it comes to play? Are they leveraging their power in any way in these negotiations?

SPRUNT: I think that for those folks in the middle, more moderate Republicans, I think that they're kind of biding their time a little bit to see how these - what are, you know, supposed to be these final negotiations between the president and the speaker go before they sort of show their hand a bit.

DAVIS: Yeah.

SPRUNT: But it wouldn't surprise me. I mean, a debt default, even though, as you said, it's not particularly, like, a barnburner of an issue for voters, it does have very real consequences. I mean, you can debate exactly how much they'll be felt immediately because the U.S. has never, you know, defaulted on its debt before. But economists widely agree, you know...

DAVIS: It's not good.

SPRUNT: ...There could be a recession. It's going to be harder to borrow money. Like, people will feel this in some way. For folks who have competitive races next year, they don't want to be tied to something that could have long-ranging implications into 2024.

DAVIS: I think that it's worth believing the president and the speaker when they say they don't want to default. But if the country does cross that red line and we do go into that scenario, we just don't know who's going to get blamed for it. I mean, there's no playbook for those politics. There's no past lessons for how that gets played out.

SPRUNT: That's right. And also, you know, it's - what? - May 2023.

DAVIS: Yeah.

SPRUNT: A default would happen sometime in June 2023. That's a long time. That's a lifetime between now and when voters go to the polls next fall. And there's a ton of stuff that could happen, you know, in the cascading ripple effects, you know, of a default that, like, we cannot predict. So it is kind of difficult to sort of chart out the blame game that will happen, you know, over a year from now.

DAVIS: All right. Well, if the weekend was any indication, Barbara, you have a very busy week ahead. So thank you...

SPRUNT: Looking forward to it.

DAVIS: Thank you for this. I'm Susan Davis. I cover politics.

SPRUNT: I'm Barbara Sprunt. I cover Congress.

LIASSON: And I'm Mara Liasson, national political correspondent.

DAVIS: And thanks for listening to the NPR POLITICS PODCAST.


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