President Biden and top congressional leaders agreed to postpone their next round of debt limit talks, which had been scheduled for Friday, until next week, a White House spokesman said on Thursday.
The decision to postpone the top-level meeting was described as a “positive development” by a person familiar with the decision, who said it would allow staff members more time to work toward an agreement before Mr. Biden and the congressional leaders meet again.
The delay comes as the United States inches closer to defaulting on its debt. Janet L. Yellen, the Treasury secretary, has warned that the government could run out of cash to pay all of its bills as soon as June 1.
The scramble to find a solution comes less than a week before Mr. Biden is planning to travel to Japan for a meeting of the leaders of the Group of 7 nations. Ms. Yellen, who has been employing accounting maneuvers to delay a default, is in Japan this week for a meeting of G7 finance ministers and warned on Thursday of the dire economic consequences if the United States failed to pay its bills on time.
“A default would threaten the gains that we’ve worked so hard to make over the past few years in our pandemic recovery,” Ms. Yellen said. “And it would spark a global downturn that would set us back much further.”
She added, “It would also risk undermining U.S. global economic leadership and raise questions about our ability to defend our national security interests.”
Mr. Biden and Republican leaders in Congress, long at loggerheads, appear to be working toward compromise to raise the nation’s debt limit. That includes an effort to cut federal discretionary spending next year and possibly further into the future.
Administration officials have so far rejected any agreement with Mr. McCarthy that rolls back Mr. Biden’s signature legislative achievements, most notably on climate change. They are insisting Republicans drop key provisions in a bill to raise the debt limit that passed the House last month, including the repeal of most of Mr. Biden’s tax incentives for clean energy and a set of new incentives for fossil fuel development.
On the narrower question of discretionary spending, administration officials are pushing for significantly smaller cuts than House Republicans approved last month. They want shorter-term caps in spending than the decade-long caps in the Republican bill. And they want to base those caps off a higher spending level than Republicans do — the amount in this year’s government funding bill, which Mr. Biden signed in December. Republicans capped spending growth from the 2022 fiscal year.
Administration officials are also open to striking a deal with Republicans on accelerating permitting for a wide range of energy projects, including wind, oil, gas and solar — a top priority of Senator Joe Manchin III of West Virginia. And Mr. Biden said on Tuesday that he would consider clawing back some unspent stimulus funds included in a bill he signed in 2021, which is a Republican priority.
Officials hope such an agreement could garner approval — and pressure on Republicans — from business groups. That combination of issues formed the basis of a potential debt-limit deal that officials from the U.S. Chamber of Commerce laid out this month.