'Shrink the room:' How Biden and McCarthy struck a debt-limit deal and staved off a catastrophe

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House Speaker Kevin McCarthy, Calif., speaks during a press conference at the Capitol, Washington, after the House has passed the debt ceiling legislation, on Wednesday, May 31st 2023. The bill will now be sent to the Senate.

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Rep. Garret G. Graves (R-La. ), flanked with House Republican Conference Chair Elise Stefanik (R-N.Y.) and Speaker of House Kevin McCarthy from California, speaks during a press conference at the Capitol, Washington, after the House has passed the debt limit bill on Wednesday, May 31st 2023. The bill will now be sent to the Senate.

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FILE – Top Republican debt mediators Rep. Garret G. Graves (R-La.) and Rep. Patrick McHenry (R-N.C.), center, Chairman of the House Financial Services Committee with Rep. Chip Roy (R-Texas), upper right, laugh while they answer questions from reporters about the progress made in the negotiations with the Biden Administration, at the Capitol, in Washington on Tuesday, May 23, 2030. Rep. Chip Roy (R-Texas), a conservative member of the House Freedom Caucus and a critic of the proposed debt ceiling agreement struck by Speaker Kevin McCarthy (R-Calif.) and President Joe Biden, says he'll try to stop the deal in the House.

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Steve Ricchetti is welcomed by Capitol Police after he has passed through security and returned to the closed-door mediation at the Capitol, in Washington on Tuesday, May 23rd 2023.

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Shalanda young, director of Office of Management and Budget and Steve Ricchetti (counselor to the president), the top negotiators of President Joe Biden in the debt crisis crisis, depart after the talks with House Speaker Kevin McCarthy’s emissaries halted, at the Capitol, Washington, on Friday, May 19 2023.

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WASHINGTON, D.C. (AP) - Mitch McConnell told Joe Biden that he had already given him the same advice: to resolve the debt limit standoff he would need to reach a deal only with House Speaker Kevin McCarthy. After a meeting between the four top congressional leaders and the president early in May, McConnell felt compelled to reiterate his advice.

McConnell, Senate Majority leader Chuck Schumer, and House Minority leader Hakeem Jeffreys all called the President after returning from the White House the same day to privately urge the president to'shrink' the room - which means that they would not be directly involved in the discussions.

McConnell told Biden that this was the only option to avoid a default that could be devastating to the economy.

Biden and McCarthy followed this path a week later. They enlisted a few trusted emissaries who negotiated a deal to lift the debt ceiling. This was a pivotal moment in a situation that had seemed unsolvable until then.

Biden, who had lived through the debacle that was a 2011 fight over debt limits, would not accept any concessions on a task he considered to be Congress' fundamental responsibility. McCarthy, prompted by conservatives who wanted to make sweeping changes in federal spending, was determined to use the borrowing authority of the country as leverage, even if that meant the U.S. would default.

The scramble which followed showed how the two most powerful people in Washington, who shared a belief in personal relationships despite having little of them between themselves, jointly avoided an unprecedented default. This could have had devastating economic consequences and unknown political implications. The story is about a House Speaker who defied expectations and was determined to address the complex debt-limit debate, as well as a President who ignored his own party's noise to prevent a default.

The episode tests McCarthy's ability to control a hard-right extremist flank, even with the 314-117 House vote.

How you finish is a question that many people ask.

McCarthy is not intimidated by his new-found confidence.

He reflected on his election to the position of speaker in the aftermath of the House passing the debt limit package. He also referred to his long struggle to win the gavel back in January. "Every question that you asked me was, how could we survive? What could we do?" I told you back then that it is not about how you begin, but how you end.

This account of Washington's weeks-long debt crisis defusing is based on interviews conducted with members of Congress, White House officials, and top congressional staffers, some of whom requested anonymity in order to discuss the details of private discussions.

The five Biden and McCarthy negotiators were perhaps the most important in clearing the blockade. They came into the discussion with a sense of authority and empowerment from their principals. The presence of Steve Ricchetti as the presidential counselor, who represents Biden better than anyone else, and Shalanda young, the Director of the Office of Management and Budget who was a senior congressional aide who managed the annual appropriations processes, were particularly comforting for Republicans.

Young and Rep. Patrick McHenry, a McCarthy negotiator from North Carolina, became so close they would check in every morning on the phone while they dropped off their children at daycare. She and Rep. Garret G. Graves of Louisiana, who represents south central Louisiana, where Young is from, sparred over the best gumbo recipe. They also squeezed in debt limit talks at a White House celebration honoring the Louisiana State University women’s basketball team, which won the national championship.

Five negotiators - Graves McHenry Ricchetti Young and Louisa Terrell, legislative affairs director - met every day in a grand office on the Capitol's first floor, beneath frescoes by 19th century muralist Constantino Brumidi. They would focus with seriousness in the office on their priorities and redlines to determine how they could come up with a deal.

The PAUSE BUTTON and a 'Regressive' Offer

Negotiations were shaky by May 19.

The Republicans lost patience when the White House did not seem to be willing to compromise on federal spending. Anything less was unacceptable to the GOP.

In a Friday morning meeting, White House officials asked McHenry to make a formal proposal. But by then, the Republicans were so frustrated that they decided to go public.

Republicans informed reporters that the talks were temporarily halted. Graves, wearing a blue button-up and ball cap that looked like they were more appropriate for a fishing expedition than high-stakes negotiations, said, as he walked quickly through the Capitol, 'We decided press pause because it is just not productive.'

Graves and McHenry later recalled their frustrations.

The friction was not about to go away. McHenry & Graves presented a new proposal that night to the administration officials. It included not only more provisions from the GOP's rejected debt-limit legislation, but also the House Republicans border-security measure.

One White House official described the offer as'regressive'.

Biden, who was in Japan for a summit of world leaders, expressed his frustration at the White House when the negotiations appeared to be going wrong.

The president stated that it was time for the opposing side to change their extreme positions. "Because a lot of what they have already proposed is, quite frankly unacceptable."

OPTIMISM AND LATE NIGHTS, AND GUMMY WORMS

Even though the public rhetoric was sharpening, there were signs the discussions were beginning to improve.

McCarthy was more upbeat than ever after Biden's departure from Japan. The negotiators were sustained by coffee, burritos and gummyworms. They worked long hours mostly at the Capitol, but also at the Eisenhower Executive Office Building where Jeff Zients was the White House chief staff.

Graves showed reporters, another time, an app that tracked his sleeping patterns. It showed that he was averaging 3 hours per night in the final stretch.

McCarthy still sent lawmakers home for the Memorial Day Weekend, McHenry says.

McHenry stated that the tone of the White House's negotiators changed. They became more serious, and more grounded in what they would have to accept.

Selling the Deal

Biden and McCarthy had announced an agreement in principle on May 27. They now needed to sell it in earnest.

McCarthy, the night before the vote was held, gathered House Republicans at the Capitol basement, brought in pizza, and guided lawmakers through the bill. He also dared Freedom Caucus to use the same confrontational words they had used earlier that day during a press conference. McCarthy subdued any revolt by the end of the meeting.

The White House was also working to appease the rank and file Democrats.

Biden and McCarthy's styles were very different. The speaker talked about debt-limit discussions at every opportunity throughout the negotiations in order to frame the discussion on his terms. The president, however, remained silent out of fear that he would ruin the deal before it was signed.

Biden was privately trying to calm his party's fears even as the deal came together. The night after the Congressional Progressive Caucus had publicly slashed the few details they were aware of, especially about the tougher requirements for federal safety net programs, Rep. Pramila Jajapal, D. Washington, received a phone call.

Biden was the one. He assured her his negotiators worked hard to minimize Republican changes to the programs offering food stamps and financial assistance.

Jayapal stated, 'I believe this would have been worse if we hadn't done that.

White House officials responded to questions and addressed complaints about their communication strategy through virtual briefings and phone calls after the deal had been finalized. By Thursday, White House officials personally called more than 130 members of Congress.

Biden called himself. He spoke to Rep. Annie Kuster (D-N.H.), the leader of the New Democrats Coalition center-left, on one call and thanked her.

Kuster stated, 'I am grateful that he is so familiar with this institution and knows what it takes to deliver the votes that will get us over the finish line and uphold the full credit and faith of the United States of America'. We all took an oath.

Biden, who had been in Colorado Springs for an Air Force Academy commencement speech, watched the House vote its approval late Wednesday night from the Cheyenne Mountain Resort. Ricchetti, Terrell and other legislative aides were on the phone with Biden during the entire call. They were munching pizza in the West Wing.

Biden expressed his gratitude and relief in a post-vote statement.

He said: "Tonight, House members took an important step to protect the hard-earned economic recovery of our country and prevent its first default." This budget agreement is bipartisan. The two sides did not get everything they wanted. This is the responsibility of government.

The Senate then worked to reach its own vote.

This report was contributed by AP White House correspondent Zeke Miller and AP Congressional reporter Lisa Mascaro.