President Biden and congressional leaders in both parties emerged from a White House meeting on Tuesday offering glimmers of hope about eventually reaching a deal to raise the nation’s borrowing limit, even as they conceded they were still far from averting a default that could come as soon as June 1.
With time dwindling to strike a compromise that could make it through Congress in time to avoid an economic catastrophe, Mr. Biden said he would cut short a diplomatic trip to Asia to be on hand for a potential breakthrough. Speaker Kevin McCarthy, the California Republican, said it was possible that such a deal could materialize within days now that the president had agreed to dispatch his top advisers for stepped-up negotiations.
“We just finished another good, productive meeting with our congressional leadership about a path forward to make sure that America does not default on its debt,” Mr. Biden said after the hourlong session in the Oval Office.
Mr. McCarthy told reporters that he could see a deal reached “by the end of the week” — a marked change in tone after he had lamented the state of the talks just hours earlier. He exulted in a news release after the meeting that “negotiations are happening.”
Still, he acknowledged that talks about spending cuts remained far apart and made it clear that the two sides had yet to agree on any policy proposals.
Republicans and Democrats had both signaled that they saw the session on Tuesday as a make-or-break moment — much more significant than a similar gathering at the White House a week ago and more urgent with just 16 days before the country is projected to default on its debt.
The meeting also appeared to wipe away any pretense by Democrats that they would accept only a clean debt limit increase without conditions from House Republicans. For weeks, Mr. Biden has maintained that negotiating over cuts must not be a condition for raising the limit and avoiding what could be a catastrophic default.
But on Tuesday, both Democratic leaders from New York, Senator Chuck Schumer, the majority leader, and Representative Hakeem Jeffries, the minority leader, told reporters at the White House that passing a bipartisan bill in both chambers was the only way forward.
“Hakeem and I are committed to getting that bipartisan bill done,” Mr. Schumer said. “We will not sacrifice our values,” he added. “They’ll probably not sacrifice their values. But we’ll have to come together on something that can avoid default. Default is a disaster.”
The meeting came a day after Treasury Secretary Janet L. Yellen reiterated that the United States could run out of money to pay its bills by June 1 if Congress does not raise or suspend the debt limit, the statutory cap on how much the government can borrow to finance its obligations. Economists say that could eliminate jobs and cause a recession.
The government reached the $31.4 trillion debt limit on Jan. 19, and the Treasury Department has been using a series of accounting maneuvers to keep paying its bills.
Ms. Yellen warned on Tuesday that the United States faced “an economic and financial catastrophe” if it defaulted and said the standoff over the debt limit was already affecting financial markets and households.
“We are already seeing the impacts of brinkmanship,” Ms. Yellen said in remarks at the Independent Community Bankers of America summit meeting.
As Tuesday’s meeting started, Mr. Biden joked to reporters that “we’re having a wonderful time — everything’s going well.”
But the session concluded without a breakthrough, even as broad areas of negotiation have emerged in recent days, including fixed caps on federal spending, reclaiming unspent funds designated for the Covid-19 emergency, stiffer work requirements for federal benefits and expedited permitting rules for energy projects.
Mr. McCarthy commended Mr. Biden for designating two officials to negotiate directly with his office and with Representative Garret Graves of Louisiana, one of Mr. McCarthy’s top lieutenants. Mr. Biden picked his senior adviser, Steve Ricchetti, and Shalanda Young, the director of the Office of Management and Budget, according to people familiar with his choices.
“The structure of how we negotiate has improved,” Mr. McCarthy said. “It now gives you a better opportunity, even though we only have a few days to get it done.”
Mr. McCarthy also singled out the proposal to reclaim unspent Covid funds, which Republican officials believe could recoup $50 to $60 billion.
“I think at the end of the day, it will be in the bill,” Mr. McCarthy said.
He also told reporters on Tuesday that any deal must tighten work requirements for safety net programs like food stamps, a proposal in the bill the House G.O.P. passed that Mr. Biden showed some openness to over the weekend, but which progressives have declared unacceptable.
“Remember what we’re talking about: able-bodied people with no dependents,” Mr. McCarthy said. “It helps people get into a job, and what does it mean when somebody gets a job? They get better pay.”
Toughening work requirements for programs like food stamps has long been anathema to many Democrats, and the proposal would face fierce resistance in the Democratic-controlled Senate.
“I cannot in good conscience support a debt ceiling proposal that pushes people into poverty,” Senator John Fetterman, Democrat of Pennsylvania, said in a statement on Tuesday. “We’re already addressing SNAP in a bipartisan way in the Farm Bill. But with default looming, jamming through harmful cuts to that program is reckless.”
Karine Jean-Pierre, the White House press secretary, said on Tuesday that Mr. Biden “will not accept proposals that take away people’s health care, health coverage.”
Administration officials have said they will not roll back any of the president’s signature legislation, particularly on climate change.
As the talks appeared to gain some momentum, Mr. Biden said he would cut short an overseas diplomatic trip to Asia to be back in Washington for what he called “final negotiations” with congressional leaders. The president will still leave on Wednesday for Hiroshima, Japan, to attend the Group of 7 meeting there, but he will return Sunday, skipping planned visits to Papua New Guinea and Australia.
Economists on Wall Street and in the White House have warned that a prolonged default could wipe out jobs and lead the country into a recession.
Democrats said earlier in the day on Tuesday that they were awaiting the outcome of the meeting to determine how aggressively to push on an emergency plan they have been preparing for months to try to steer around opposition from Republican leaders and force a debt limit increase vote.
Starting Tuesday, they have the opportunity to round up signatures for a special discharge petition that would automatically prompt such a vote if they won support from a majority of members of the House. Democrats would need at least five Republicans to join them to reach the necessary threshold of 218, and winning them over would be extremely difficult unless the crisis were at its peak.
Lawmakers also said there was increasing talk of Mr. Biden invoking the 14th Amendment of the Constitution to raise the debt ceiling unilaterally, a move they acknowledged would draw a legal challenge — and which Ms. Yellen has questioned — but could still avert economic disaster.
With so much uncertainty, Senate Democrats were also weighing whether they would be able to take a weeklong recess scheduled to begin on Monday, before the Memorial Day weekend.
Alan Rappeport, Michael D. Shear and Carl Hulse contributed reporting.