Biden, McCarthy had a 'productive' call on US debt

STORY: U.S. President Joe Biden is set to meet Republican House Speaker Kevin McCarthy on Monday to try to get closer to a deal on the debt ceiling, following what McCarthy described as a “productive” phone call.

Biden told reporters upon his return to the White House from Japan that the call "went well".

And McCarthy struck a more positive tone on the issue on Sunday, despite no sign of a final agreement being hammered out.

[Kevin McCarthy, House Speaker]

“What I am looking at is where our differences are and how we could solve those. I felt that part was productive. But look, there is no agreement, we are still apart. The agreement would be let's get our teams back together so everybody clearly understands what we are talking about, what they are talking about.”

Talks had stalled as both sides fell back to calling the other side’s position extremist.

Biden, who was in Hiroshima for the Group of Seven summit, said before the call that Republicans’ demands were “unacceptable”.

Democrats have been pushing to hold spending steady at this year's levels, while Republicans want to return to 2022 levels. Last month the Republican-led House passed legislation that would cut government spending by eight percent.

Democrats have said it would mean average cuts of 22% to education and law enforcement, a figure top Republicans haven’t disputed.

In any case, they are on a tight schedule to strike a deal before June – with risk of default already putting markets on edge.

[Kevin McCarthy, House Speaker]

“I have spoken to Schumer, Leader Schumer, I was giving him seven days and he told me he probably doesn't need that much time. We need to post a bill to whatever it is that we agree to, it takes some time to write it. We have to have it in three days, 72 hours, before we can vote on it, and then it would go to the Senate.”

U.S. Treasury Secretary Janet Yellen said June 1 was a "hard deadline" for raising the $31.4 trillion debt ceiling, lest the country risk triggering a default, sparking chaos in financial markets and spiking interest rates.