 THE NEWS There was no public sign of a major breakthrough on Tuesday after President Biden finally sat down with Congressional leaders to discuss the debt ceiling. Democrats and Republicans both emerged from the White House gathering pointing fingers at each others’ intransigence. “Everybody reiterated the positions they were at. I didn’t see any new movement,” House Speaker Kevin McCarthy told reporters after leaving the Oval Office. “We explicitly asked Speaker McCarthy, would he take default off the table. He refused,” Senate Majority Leader Chuck Schumer complained during his own presser. But despite the outward headbutting, there were also subtle signs of progress. Biden called the meeting “productive,” and the leaders all said they would come together again on Friday. Meanwhile, both sides noted areas where there may be room for potential compromise, including on the budget, the fate of unused COVID relief spending, and energy permitting reform. JOSEPH AND JORDAN’S VIEW Call us Pollyannas, but if you gaze hard enough, it’s possible to see the landing strip for a possible deal through all the storm clouds. Biden and the Democrats have consistently said they are willing to negotiate over the federal budget, which is appropriated annually, but not under threat of default. That process now seems to be getting under way. If budget talks succeed, there may be a way for Republicans to declare victory and raise the debt limit while Democrats claim they never negotiated over raising it in the first place. Schumer told reporters that Republican and Democratic Hill leadership staff are meeting with the head of the White House Office of Management and Budget on Tuesday or Wednesday to start hammering out details on a spending proposal. “Those discussions should begin soon and I’m hopeful maybe we can come to some kind of agreement there,” he said, calling it “good news.” Meanwhile, both Biden and McCarthy sketched out other areas of negotiation. McCarthy said Biden had expressed openness to permitting reform, a top GOP priority that also has drawn significant support among Democrats like West Virginia Sen. Joe Manchin. For his part, Biden said he was open to rescinding unused COVID aid, something that Republicans have also demanded. “We don’t need it all,” he said. There’s been fairly noisy speculation around Washington that a final debt ceiling agreement would probably involve some combination of limits on discretionary spending, rescinding some COVID funds, and permitting reform — so the fact that those three issues all came up as areas for negotiation seems notable. “There’s a bipartisan deal staring both parties right in the face,” Brian Riedl, a budget expert in touch with Hill Republicans, told Semafor. Biden did say during his press conference that he has “been considering” whether the constitution’s 14th Amendment would allow him to simply ignore the debt ceiling, as many liberal legal scholars have argued. But he spent more time explaining its potential downsides, including a drawn-out legal battle that might still end in a catastrophic default if the Supreme Court strikes it down. “The problem is it would have to be litigated,” he said. “And in the meantime, without an extension, it would still end up in the same place.” That Biden appears to be playing down workarounds suggests that he’s settling into deal making mode. ROOM FOR DISAGREEMENT Pulling off a complicated dance around simultaneous budget and debt ceiling talks won’t be easy, especially after McCarthy poured cold water on a temporary extension that buys more time. “I don’t think a short-term extension does anything,” he said Tuesday. And of course, it’s still a question how many GOP hardliners will be willing to accept any sort of debt ceiling compromise that’s less sweeping than the partisan bill Republicans passed through the House. “If anyone thinks that Republicans are prepared to cave, they need to get their head examined,” Jim Manley, a former Senate Democratic leadership aide, told Semafor. “There’s a core group in the House that aren’t going to cave without significant concessions, and the concessions they’re demanding are unacceptable to most Democrats in both the House and Senate and in the White House.” To share this story, click here. | 
