WASHINGTON — During the weekend after the stunning collapse of California’s Silicon Valley Bank, no one from the White House or Biden administration called House Speaker Kevin McCarthy — the most influential politician from the Golden State as well as the most powerful Republican in Congress.
McCarthy checked in with Federal Reserve Chairman Jerome Powell, as well as his committee chairmen and his Democratic counterpart, Minority Leader Hakeem Jeffries of New York. And rather than waiting by the phone for a call, McCarthy said he proactively dialed up Treasury Secretary Janet Yellen. They wound up talking that Saturday, the first of “multiple” conversations, a Treasury spokesperson said.
But he did not connect with any top White House officials over the weekend as Silicon Valley Bank, and then Signature Bank, failed, prompting fears that a contagion could spur a broader bank run and financial crash.
“I never had somebody from the White House reach out to me. Not one person from the administration called me; I called them,” McCarthy recounted to reporters last week at the annual House GOP retreat in Orlando.
The Biden administration scoffs at the idea that McCarthy is being neglected. Putting aside the recent bank failures, an internal White House memo shows that Biden has reached out to the House Republican leader again and again, calling him on his birthday and on his becoming speaker. If anything, the White House says Biden might be the spurned suitor: McCarthy didn’t visit the building once in a 14-month period in 2021-22, even though he had been invited repeatedly, a White House official says. Overall, the White House has invited McCarthy to visit more than 20 times; he came eight.
No one anticipates grand legislative breakthroughs in a period of divided government and heightened polarization. But when the president and House speaker are barely on speaking terms, the more relevant question is whether they can stave off a financial calamity. In the coming months, Biden and McCarthy will need to strike a compromise to keep the nation from defaulting on its debt and, in the fall, they’ll need another agreement to keep the government from shutting down.
At this point, no meaningful negotiations are underway and there is no deal in sight. The deadline to avoid a catastrophic default, according to the Treasury Department, is June 5.
McCarthy and the Republicans are demanding that deep spending cuts be tied to any hike in the debt ceiling — a position that McCarthy agreed to in order to win backing from the far-right Freedom Caucus to become speaker. Biden has insisted on a clean debt hike, not linked to any spending cuts. Their first and only White House meeting took place on Feb. 1 and yielded no breakthrough; the two haven’t met to discuss the issue since.
During a St. Patrick’s Day lunch in the Capitol, McCarthy said he pointedly asked Biden when the two could sit down again and start negotiating. The president, seated next to him, replied with a familiar refrain, McCarthy recalled: Where’s the Republican budget?
At an Orlando resort last week, McCarthy’s growing frustration was evident. He complained to reporters that Biden was being stubborn. And on Tuesday, McCarthy fired off a letter to Biden, arguing that the president’s refusal to negotiate on “out-of-control spending” was jeopardizing the fragile economy.
The speaker insisted that Biden’s team reach out by the end of the week to set up a meeting.
“[Y]ou and your team have been completely missing in action on any meaningful follow-up to this rapidly approaching deadline,” McCarthy wrote, a message he reiterated in interviews with reporters later in the day.
“Your position — if maintained — could prevent America from meeting its obligations and hold dire ramifications for the entire nation.”
McCarthy’s letter included a handful of general ideas for tackling the $31.5 trillion national debt, including reclaiming unspent Covid funds, strengthening work requirements for some government programs and cutting non-defense spending to pre-inflationary levels. But his lack of specifics also highlighted the fact that, weeks after Biden rolled out his spending blueprint, House Republicans have yet to unveil their own budget document for the next fiscal year.
In reply to McCarthy’s letter, the White House dug in. Speaking to reporters Tuesday before departing North Carolina, where he’d given a speech, Biden was asked if he planned to meet with McCarthy in the event he does not put forward a budget proposal.
“Well, I don’t know what we’re gonna meet on,” Biden said.
Republicans said Biden’s focus on a GOP budget is about political gamesmanship given that House Democrats did not produce a traditional budget when they were in power.
“Democrats didn’t produce one for the last four years. They never passed one out of the Budget Committee. They would ‘deem’ their budget every year. So now we have to have a Republican budget?” asked Rules Committee Chairman Tom Cole, R-Okla., a senior appropriator and close McCarthy ally. “That didn’t seem to stop President Biden when he was working with a Democratic Congress. He didn’t tell Nancy Pelosi, ‘I have to have your budget. You have the majority. We have to see your budget right now.’
“So this is all politics and political posturing, and it’s dangerous.”
That Biden appears in no rush to meet with McCarthy — three months before a potential debt default — suggests the White House believes it is playing a much stronger hand.
By keeping the speaker at arm’s length and repeatedly needling him about the GOP’s failure to produce a budget blueprint, top Democrats say Biden is drawing attention to McCarthy’s precarious hold on his leadership position. With just a five-seat majority, McCarthy is trying to appease both conservative bomb throwers who are demanding drastic cuts and moderates in his conference who don’t want to see programs gutted.
Biden nodded to the speaker’s predicament during an appearance at a Senate Democratic meeting this month. McCarthy is in an interesting spot, Biden said, to laughter from the lawmakers.
“We have the facts and the math on our side,” Pennsylvania Rep. Brendan Boyle, the top Democrat on the Budget Committee, said in an interview Tuesday. “But I’ve also always had the view that given all of the various promises that Kevin McCarthy made in order to get elected speaker, it’ll be very difficult for him to come up with a budget that he could get 218 of his own members to vote for. And the fact that we haven’t seen it yet, I think reflects that reality.”
One Republican on the Budget panel, Rep. Ralph Norman, who initially opposed McCarthy’s speaker bid then later backed him, predicted the different factions of the GOP conference would be able to come together on a budget, though he conceded it would not be easy.
“We’ll present a budget; we’re going to present the debt-limit case. If [Biden] shuts the government down, it’s gonna be on the Biden administration — it won’t be on us,” Norman said in an interview. There will be gnashing of teeth, but that’s a good thing.