WASHINGTON (AP) -- House Speaker Kevin McCarthy said Wednesday he was sending Republican negotiators to the White House to finish out debt limit talks, but warned the two sides are "still far apart" as they try to reach a budget deal with President Joe Biden.
McCarthy said he remained optimistic they could make progress in hopes of an agreement before a deadline as soon as next week, when the Treasury Department could run out of cash to pay its bills. "We're not going to default," said McCarthy, R-Calif.
Defiant, the speaker said "it's not my fault" that Washington was careening toward a crisis, pushing blame onto the White House for Biden's refusal to negotiate earlier as Republicans acted to slash spending.
"I'm hoping we can make progress," McCarthy said.
Debt ceiling negotiations are locked on a classic problem that has vexed, divided and disrupted Washington before: Republicans led by McCarthy want to roll back federal government spending, while Biden and other Democrats do not.
White House press secretary Karine Jean-Pierre decried what the administration called a "manufactured crisis" set in motion by Republicans pushing "extreme proposals" that would hurt "every single part of the country, whether you're in a red state or a blue state."
Time is short to strike a deal. Treasury Secretary Janet Yellen said Wednesday that "it seems almost certain" that the United States would not make it past early June without defaulting. That would be catastrophic, as the government risks running out of cash to pay its bills as soon as June 1.
"We are seeing some stress already in Treasury markets," Yellen said at a Wall Street Journal event.
"Even in the run up to an agreement, when one does occur, there can be substantial financial market distress, we're seeing just the beginnings of it," Yellen said.
The political standoff is edging the country closer to a crisis, roiling financial markets and threatening the global economy. Anxious retirees and social service groups are among those making default contingency plans. Negotiators headed to the White House and resumed talks at noon.
Cheered on by a hard-charging conservative House majority that hoisted him to power, McCarthy was not swayed by a White House counter-offer to freeze spending instead.
"A freeze is not going to work," McCarthy said. "We have to spend less than we spent last year. That is the starting point."
The longstanding Washington debate over the size and scope of the federal government now has just days to be resolved. Failure to raise the nation's debt ceiling, now at $31 trillion, would risk a potentially chaotic federal default, almost certain to inflict economic turmoil at home and abroad.
Dragging into a third week, the negotiations over raising the nation's debt limit were never supposed to arrive at this point.
The White House insisted early on it was unwilling to barter over the need to pay the nation's bills, demanding that Congress simply lift the ceiling as it has done many times before with no strings attached.
But the newly elected speaker visited Biden at the Oval Office in February, urging the president to come to the negotiating table on a budget package that would reduce spending and the nation's ballooning deficits in exchange for the vote to allow future debt.
"I told the president Feb. 1," McCarthy recounted. "I said, Mr. President, you're not going to raise taxes. You've got to spend less money than was spent this year."
Negotiations are focused on finding agreement on a 2024 budget year limit. Republicans have set aside their demand to roll back spending to 2022 levels, but say that next year's government spending must be less than it is now. But the White House instead offered to freeze spending at current 2023 numbers.
By sparing defense and some veterans accounts from reductions, the Republicans would shift the bulk of spending reductions to other federal programs, an approach that breaks a tradition in Congress of budget cap parity.
Agreement on that topline spending level is vital. It would enable McCarthy to deliver spending restraints for conservatives while not being so severe that it would chase off the Democratic votes that would be needed in the divided Congress to pass any bill.
But what, if anything, Democrats would get if they agreed to deeper spending cuts than Biden's team has proposed is uncertain.
The White House has continued to argue that deficits can be reduced by ending tax breaks for wealthier households and some corporations, but McCarthy said he told the president at their February meeting that raising revenue from tax hikes is off the table.
The negotiators are now also debating the duration of a 1 percent cap on annual spending growth going forward, with Republicans dropping their demand for a 10-year cap to six years, but the White House offering only one year, for 2025.
Typically, the debt ceiling has been lifted for the duration of a budget deal, and in this negotiation the White House is angling for a two-year agreement that would push past the presidential elections.