House Speaker Kevin McCarthy optimistic about debt ceiling deal by 'end of the week'

May 16 (UPI) -- House Speaker Kevin McCarthy expressed optimism Tuesday over President Joe Biden's second debt ceiling meeting with congressional leaders, saying there could be "a deal by the end of the week."

Biden met for a second time in the Oval Office with McCarthy, R-Calif., House Democratic leader Hakeem Jeffries, D-N.Y., Senate Democratic leader Chuck Schumer, D-N.Y., and Senate Republican leader Mitch McConnell, R-Ky., on Tuesday after the group failed to reach common ground on raising the debt ceiling during a meeting May 9.

After Tuesday's hourlong meeting and with a potentially catastrophic default just weeks away, McCarthy told reporters that Biden had "changed the scope" of the talks and had appointed White House officials to work directly with members of the speaker's team.

"So, the structure of how we negotiate has improved," McCarthy said. "So it now gives you a better opportunity, even though we only have a few days to get it done."

"It is possible to get a deal by the end of the week. It's not that difficult to get to an agreement," McCarthy added.

Schumer also called the meeting "good and productive."

"We all came to agreement that we were going to continue discussions," Schumer said. "Hopefully, we can come to an agreement. We don't have much time. But default is just the worst, worst alternative."

Meantime Biden, who also expressed optimism about a possible bipartisan budget agreement, has canceled his upcoming foreign trips to Papua New Guinea and Australia due to the ongoing talks, the White House confirmed Tuesday.

"The president spoke to Prime Minister Albanese earlier today to inform him that he will be postponing his trip to Australia. He also invited the prime minister for an official state visit at a time to be agreed by the teams," White House Press Secretary Karine Jean-Pierre said in a statement. "The president's team engaged with the Prime Minister of Papua New Guinea's team to inform them, as well."

Biden will continue his plans to leave for Japan on Wednesday to attend a summit of the Group of Seven major industrial countries, but will cut his trip short and return Sunday. Staff talks will continue while he is gone.

Besides spending cuts, one of the key sticking points in the debt ceiling talks is the Democrats' opposition to Republican demands for tougher work requirements for federal aid programs. The proposal, passed in the House, would require able-bodied adults who are younger than 55 to work a minimum of 20 hours each week in order to get food stamps beyond three months.

In an urgent letter to McCarthy on Monday, Treasury Secretary Janet Yellen reiterated that the United States was on course to default on its national debt as early as June 1.

"With additional information now available, I am writing to note that we still estimate that Treasury will likely no longer be able to satisfy all of the government's obligations if Congress has not acted to raise or suspend the debt limit by early June, and potentially as early as June 1," she wrote.

"Waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States."

Last week, the Congressional Budget Office released a report noting that "if the debt limit remains unchanged, there is significant risk that at some point in the first two weeks of June, the government will no longer be able to pay all of its obligations."

Millions of people would be affected as government workers and Social Security recipients wouldn't get paid, while many consumers would find it increasingly difficult to qualify for credit, raising the chances for a recession.

A default could also undermine faith in the U.S. economy given the nation's ubiquitous standing in global trade.

The latest sit-down with Biden comes after a follow-up meeting scheduled for Friday was postponed to allow more time for McCarthy's staff to meet with White House aides on a potential compromise. Lawmakers involved in those talks indicated some movement was taking place behind the scenes.

Over the weekend, Biden said he was optimistic about the discussions, telling reporters, "I really think there's a desire on their part, as well as ours, to reach an agreement, and I think we'll be able to do it."

On Monday night, Biden posted some tweets to highlight some of the economic dangers ahead if Congress refused to act.

"A default on America's debt would be catastrophic for working families: 8 million jobs gone. A recession triggered. Retirement accounts devastated. Social Security checks delayed," Biden wrote. "It's beyond me why MAGA House Republicans would ever think this is an appropriate threat to make."

Biden and House Republicans remain split over paying the nation's debt through spending cuts, which the president has refused to go along with.

The president has said he wants to raise the debt ceiling without any conditions and negotiate spending cuts separately as part of the national budget plan. McCarthy has continued to express frustration with Biden since the House passed a bill in April that would slash federal programs to raise the debt ceiling by $1.5 trillion over the next year.