(WASHINGTON) — With time running short, President Joe Biden and congressional leaders will meet Tuesday afternoon to discuss the debt ceiling as Treasury Secretary Janet Yellen stressed a default could trigger a recession.
Biden, House Speaker Kevin McCarthy, House Minority Leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell will meet at the White House at 3 p.m.
“We don’t have that much time left. We want to make sure we avoid a default but they’ve got to get serious and they haven’t been serious about any of these negotiations,” McCarthy told ABC News Senior Congressional Correspondent Rachel Scott on Tuesday.
Hours ahead of the summit, Yellen said the economic shock that would result from an unprecedented default “could lead to a recession.”
“It’s essential Congress act as soon as possible,” she said as she delivered remarks in downtown Washington, stating they’re already seeing “the impacts of brinkmanship” and “default would generate an economic catastrophe.”
Yellen has repeatedly warned the U.S. could default in early June, possibly as soon as June 1, though the exact date remains uncertain.
Yellen wrote Monday in a letter to McCarthy the Treasury was already seeing adverse impacts on the economy as negotiations continue — including increased borrowing costs — and more harm could come if lawmakers wait until the final hour to strike a deal.
Schumer also laid out possible consequences of a default.
“If you want to own a home, default would take that dream and run it through the shredder. If you want to protect your 401(k), default would rob you of your livelihood,” Schumer said.
Adding pressure to Tuesday’s debt ceiling sitdown is Biden’s upcoming trip abroad to meet with allies in Japan, Papua New Guinea and Australia. The president is set to depart Wednesday and is expected to be away for approximately a week.
McCarthy on Tuesday appeared to criticize Biden’s schedule, telling ABC he believes “the American public wants to have an American president focused on American problems and solutions.”
Biden said last week skipping the G-7 summit is “possible but not likely” based on debt ceiling negotiations.
“I’m still committed,” he said of the trip. “But obviously this is the single most important thing that is on the agenda.”
White House spokesperson John Kirby said Monday Biden was “still planning to leave as scheduled” for his Indo-Pacific trip.
Biden’s schedule isn’t the only issue as the House is set to be out of town starting May 26 and will return on June 5, while the Senate will be away from May 22 to May 29, according to tentative schedules.
The so-called “Big Five” last met a week ago to talk debt ceiling, a meeting that ended with no movement toward a deal. Staff-level conversations have continued since then between the administration and congressional leaders.
Biden and Democrats have insisted Republicans take default off the table, and separate the debt ceiling from the 2024 budget. Republicans, on the other hand, have said they’ve done their job by passing the Limit, Save, Grow Act last month to raise the debt ceiling and enact deep spending cuts.
Possible areas of agreement on budget talks include clawing back billions of dollars in unspent COVID-19 relief and reforming the permitting process for energy projects, sources familiar with the talks told ABC News.
Schumer said Tuesday the fiscal talks “are separate but simultaneous to our responsibility to avoid default.”
“Democrats will not use the threat of default to get what we want,” Schumer said on the Senate floor. “Nobody should use default as a hostage.”
McConnell, meanwhile, said it’s up to Biden to “pretend the last election didn’t happen or sit down with the speaker and deal responsibly with out nation’s test.”
“Time is of the essence, of the essence. So for the second time, i’ll be glad to sit in at the white house to support speaker McCarthy and to urge President Biden to start operating in reality,” McConnell continued.
Biden said over the weekend he remained “optimistic” both sides be able to come to a solution.
“I really believe there is a desire on their part as well as ours to reach an agreement” he said during a bike ride in Delaware. “I think we’ll be able to do it.”
But McCarthy on Monday downplayed any signs of progress, telling ABC News both sides were “nowhere near coming to a conclusion.”
“I don’t think we’re in a good place,” McCarthy later said during a pro-police press conference. “I know we’re not.”
ABC News’ John Parkinson contributed to this report.
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