Formal talks on the debt ceiling finally began Tuesday between President Joe Biden and House Speaker Kevin McCarthy.

“We’re going to start, we’re going to solve all the problems in the world,” Biden wryly told reporters in very brief remarks as he and McCarthy and other leaders began their meeting.

McCarthy sat on a couch to Biden’s right and, like the president and other leaders in attendance, did not respond to shouted questions before reporters were led from the room, according to a pool report.

The much-anticipated meeting in the Oval Office came more than three months after the two leaders last met to discuss tax issues, and just days after Treasury Secretary Janet Yellen announced a US default could begin as soon as June 1. could happen in June.

Also in attendance Tuesday were Democratic House Speaker Hakeem Jeffries (D-NY), Senate Majority Leader Chuck Schumer (D-NY), and Senate Minority Leader Mitch McConnell (R-KY).

WASHINGTON, DC - MAY 9: US Speaker of the House Kevin McCarthy (R-CA) and President Joe Bided meet with fellow lawmakers in the Oval Office of the White House on May 9, 2023 in Washington, DC.  Congressional lawmakers met with the President to negotiate how to address the debt ceiling before June 1, as US Treasury Secretary Janet Yellen warned Congress that the United States would default on its debt.  (Photo by Anna Moneymaker/Getty Images)

House Speaker Kevin McCarthy (R-CA) and President Joe Biden meet with fellow lawmakers at the White House on Tuesday to discuss the debt ceiling. (Anna Moneymaker/Getty Images)

Positioning was intense in the hours leading up to the meeting. Spokesman McCarthy told reporters on Capitol Hill earlier Tuesday that he was opposed to the idea of ​​a short-term extension to September 30 and that an agreement may be needed by next week, saying: “I don’t think it’s that difficult.” .”

The speaker too tweeted less than an hour before sitting down that the meeting “represents a new opportunity for Democrats to find common ground and act responsibly for future generations.”

On the other hand, White House press secretary Karine Jean Pierre seemed to agree on at least one point, saying, “A short-term extension isn’t our plan either.” Those comments seemed to take one of the last backup plans off the table , as both sides have now publicly committed to completing a complicated deal in just weeks.

Pressure from corporate groups

What observers will be watching closely during the talks over the coming hours and days are signs that Republicans and Democrats are moving away from their currently irreconcilable positions.

The meeting also comes amid mounting Wall Street fears that the stalemate will weigh on stocks for at least the rest of the month as Washington flirts again with a default.

On Tuesday, shares closed lower as investors awaited developments from Washington on whether talks would reduce the likelihood of a default within weeks.

Business groups also weighed in ahead of the meeting with Neil Bradley of the US Chamber of Commerce calls for a quick agreement adding that the twin issues of spending caps and energy permit reform are “two areas ripe for inclusion.”

Joshua Bolten, CEO of the Business Roundtable, also called for bipartisan negotiations, warning that a default “would deal a major blow to the economy, leading to widespread job losses, depleted pension plans and higher borrowing costs for families, businesses and the government.”

The White House also recently stressed the economic cost of defaulting, with Yellen calling it a recipe for “economic misery.”

During a Yahoo Finance Live appearance on Tuesday, political strategist Steve Schmidt warned Wall Street watchers that the outcome here will be very difficult to predict. “There’s no rationality in that, and that’s what’s broken about American politics,” he said.

Next Steps

Few expect Tuesday’s gathering to yield tangible results immediately.

President Biden has already signaled that he intends to use the president’s bullying booth on a trip to New York’s Hudson River Valley scheduled for Wednesday. There, he will deliver a speech on the debt limit in the district of Rep. Mike Lawler (R-NY), a vulnerable Republican who is under pressure to break away from his party.

An intriguing development on Tuesday was when Lawler told the Associated Press that he would be appearing alongside Biden during Wednesday’s stop. He said the White House invited him to join and he accepted “perhaps to their surprise.”

Another issue sure to occupy the coming weeks is an overseas trip that Biden has scheduled for later this month that will take him to Japan, Australia and Papua New Guinea, with the president calling for a visit just days before the May 1 failure. to return in June.

On Tuesday, Jean-Pierre declined to comment on whether the White House is considering shortening the trip amid the debt ceiling crisis, instead reiterating that the president’s focus at Tuesday’s meeting would be to get Congress on the Get action and pass a clean debt ceiling hike.

“That’s going to be the President’s focus today,” she said.

Ben Vershkul is the Washington correspondent for Yahoo Finance.

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