Debt ceiling talks break up with negotiators unsure when they’ll next meet

By Melanie Zanona, Haley Talbot, Jessica Dean and Kevin Liptak, CNN

(CNN) — A meeting between top debt ceiling negotiators from the White House and House Speaker Kevin McCarthy’s office ended Friday night, with neither side able to say when they’d again meet in-person.

Sources at the White House and on Capitol Hill said there were no debt ceiling meetings scheduled for Saturday.

McCarthy has requested to speak with President Joe Biden regarding the debt ceiling, according to a source familiar with the matter. CNN has reached out to the White House for comment.

Biden told reporters at the G7 summit in Japan on Sunday he would speak with McCarthy later in the day, but declined to provide a preview of his message before the call.

“I’m going to give it to him before I give it to you,” Biden said in the brief exchange with reporters following a photo op with the leaders of Japan and South Korea.

The breakdown in talks came after multiple sources told CNN that earlier discussions had hit a snag, triggering a pause. The setback dashed hopes that there could be a deal in principle by the weekend.

“At the direction of the Speaker of the House, we reengaged, had a very, very candid discussion, talking about where we are, talking about where things need to be, what’s reasonable, acceptable,” Louisiana Rep. Garret Graves, who is leading negotiations for House Republicans, told reporters of the brief reconvening late Friday.

Neither Graves nor Rep. Patrick McHenry, a North Carolina Republican, seemed optimistic that the situation had moved any closer to a deal.

“This wasn’t a negotiation tonight, this was a candid discussion about realistic numbers, a realistic path forward and something that truly changes the trajectory of this country spending and debt problems,” Graves said.

The White House took direct aim at GOP negotiators for not moving off budget proposals to slash federal spending and not addressing new revenues. The statement by communications director Ben LaBolt marked a sharp break from the more optimistic statements delivered by White House officials in recent days and reflected deep frustrations at the state of talks.

The “President assigned an experienced negotiating team and directed them to act in good faith to reach an agreement,” LaBolt wrote in the statement, delivered to reporters traveling with President Biden in Japan for the G7 summit. “But now, Republicans are taking the economy hostage and pushing us to the brink of default, which could cost millions of jobs and tip the country into recession after two years of steady job and wage growth.”

The latest proposal from the White House would have frozen non-defense and defense discretionary spending from fiscal year 2023 to fiscal year 2024, according to a source familiar with the matter.

When scored over a 10-year period, the proposal would technically reflect a spending cut when inflation is accounted for, as it is by score keepers.

House Republicans, however, rejected the proposal outright as completely insufficient.

McCarthy said Saturday they won’t be able to resume negotiations with the administration until Biden is back in Washington.

“Unfortunately, the White House moved backwards … I don’t think we’re going to be able to move forward until the President can get back,” McCarthy said.

“Just from the last day til now, (White House negotiators) moved backwards. They actually want to spend more money than we spent this year. We can’t do that. We all know how big this deficit is,” he added.

The White House said late Saturday that Republican offers made were unrealistic.

“Last night in DC, the Speaker’s team put on the table an offer that was a big step back and contained a set of extreme partisan demands that could never pass both Houses of Congress,” White House Press Secretary Karine Jean-Pierre said in a statement.

Speaking to reporters earlier Saturday in Japan, however, Biden said he was not concerned “at all” that negotiations with House Republicans will fail to avoid a default.

“This goes in stages. I’ve been in these negotiations before,” the president said.

Earlier Friday in Washington, Steve Ricchetti, counselor to the president and one of the lead negotiators for the White House, told reporters they were leaving the Capitol but were “gonna keep working tonight.”

McCarthy had told Fox Business earlier Friday evening that he remained “very frustrated” with the White House’s position.

GOP Rep. Dusty Johnson, an ally of McCarthy and chair of the centrist Main Street Caucus, told CNN that spending cuts were the biggest sticking point in the negotiations.

“We are too far apart on the topline number,” Johnson said earlier Friday, referring to the level of discretionary spending for fiscal year 2024. “McCarthy is holding the line. He knows where the Republican conference is. And the White House does not understand that Washington has a spending problem. “

“The gap on topline numbers is not the only problem, but it’s the biggest problem,” he added.

The South Dakota Republican said that he thought a deal was still possible by the early June deadline, but that “we’re in bad shape.” The president, he said, “needs to decide if he wants a deal or not.”

The standoff over the US debt ceiling has been a “subject of interest” in Biden’s meetings at the G7 summit, his national security adviser Jake Sullivan said Friday. Biden, he said, was voicing confidence in conversations with his counterparts that negotiators would find a way to avoid default and potentially catastrophic consequences for the global economy.

“Countries want to have a sense of how these negotiations are going to play out. And the president has expressed confidence that he believes that we can drive to an outcome where we do avoid default, and part of the reason that he’s returning home tomorrow, rather than continuing with the rest of the trip, is so that he can help lead the effort to bring it home,” Sullivan said in Hiroshima.

Biden, who left a leaders’ dinner early to be updated by his team, has received continual updates on the negotiations underway in Washington.

Sources familiar with the White House’s thinking acknowledged that part of the reason for the temporary breakdown in talks was that White House negotiators viewed the extent of spending cuts House Republicans were pushing for as unacceptable, though the White House has expressed a willingness to cut some spending.

McCarthy confirmed earlier Friday that talks had paused, saying there was not enough “movement” from the White House and bringing up the issue of spending cuts.

“We’ve got to get movement by the White House. And we don’t have any movement yet,” McCarthy told reporters as he headed into the Capitol.

Asked why he had such an optimistic tone one day before, McCarthy said, “I really felt we were at the location where I could see the path. The White House is just – we can’t be spending more money next year. We have to spend less than the year before. It’s pretty easy.”

McCarthy said he had not spoken to the president and did not answer questions about next steps.

The pause in and of itself doesn’t mean the talks were falling apart. High-stakes talks on Capitol Hill over the years often feature derailments or collapses before negotiators pull things back on track. But it does underscore the challenges ahead to reaching a deal.

Time is of the essence and pressure is building to raise the borrowing limit ahead of June 1, which is the earliest date the Treasury Department says the government could be unable to pay its bills. If the US were to default, it would likely trigger a global economic catastrophe.

Graves had left a brief meeting with negotiators Friday morning saying the situation was “not productive.” At the time, he said he was not sure they would meet again this weekend.

“Until people are willing to have reasonable conversations about how you can actually can move forward and do the right thing we aren’t going to sit here and talk to ourselves. That’s what’s going on,” Graves said.

As talks stalled, a White House official acknowledged that there were “real differences” and “talks will be difficult,” but said the president’s negotiating team is working to reach a “reasonable bipartisan solution.”

This headline and story have been updated with additional developments.

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CNN’s Phil Mattingly, Lauren Fox, Phil Mattingly, Jeremy Diamond, Arlette Saenz and Kristin Wilson contributed to this report.