Biden, McCarthy speak by phone as Congress races to avert default

Chairman Joe Biden and House Speaker Kevin McCarthy are speaking by phone Saturday as their negotiators rushed to finalize an agreement to avert a catastrophic default, two people familiar with the matter said.

The two leaders, hand-picked negotiators, have been working around the clock to resolve the threat of a default, which the U.S. Treasury Secretary Janet Yellen says could happen June 5th.

Republican Patrick McHenry, one of McCarthy's top negotiators, said most of the remaining issues, which he described as major disagreements, must be resolved directly by the two leaders.

The call began at about 6 p.m. in Washington.

It's hours or we re here for more days, or we are here for a more meaningful discussion, Mr. McHenry said.

The two leaders met in person on Monday. It s unclear whether they have spoken by phone since then.

Biden has spoken with Senate Minority Leader Chuck Schumer and House Democratic leader Hakeem Jeffries on the emerging deal, a spokeswoman said.

If a default occurs, economists fear it could send the US into a recession, with widespread job losses and higher consumer borrowing costs spilling into the coming election year.

The current standoff over the US debt ceiling has the potential to wreak more havoc on the economy than any previous go-around, said Bloomberg Economics chief economist Anna Wong.

As of Thursday, it fell to $38.8 billion, the lowest since 2017 according to data published Friday by the National Institutes of Health.

To allow the lawmakers to review the text before a vote, McCarthy has pledged toabide by a 72-hour rule. Republicans aren't budging on that, McHenry said.

That rule, combined with procedural hurdles in the Senate, could push Congress up to the June 5 deadline.

Work requirements for anti-poverty programs like Medicaid - pushed by Republicans and opposed by Democrats - remain an unresolved issue Saturday night, McHenry said. It also has language to ease the permitting process for energy projects.

There's no way to sort of gloss that over, McHenry said. But there are big and thorny issues that we have to resolve. Any deal, McHenry said, must show a trend of lower federal spending over multiple years.

None Trump sighs at the GOP tightening as the field widens.