1. President Biden and Speaker Kevin McCarthy are set to resume negotiations on the debt ceiling, which is projected to be reached as soon as June 1. Republicans have demanded spending cuts in exchange for raising the debt limit, while Democrats have proposed a discretionary spending cap that would save $1 trillion over a decade.
2. The two sides remain far apart on key issues, including caps for federal spending, work requirements for some recipients of federal antipoverty assistance, and funding meant to help the I.R.S. crack down on high earners and corporations that evade taxes.
3. Treasury Secretary Janet L. Yellen has warned that a default would "generate an economic and financial catastrophe," and both sides are working against a punishing clock to reach an agreement before the government loses its ability to pay its bills on time. While Mr. Biden believes he has the power to challenge the constitutionality of the nation's borrowing limit, he does not believe such a challenge could succeed in time to avoid a default on federal debt if lawmakers do not raise the limit soon.