Biden and McCarthy Negotiate Agreement for Raising Federal Debt Ceiling Amidst Impending Deadline
After months of stalemate, President Joe Biden and House Minority Leader Kevin McCarthy have begun meeting to discuss an agreement for raising the federal debt ceiling.[0] Negotiating teams have been appointed to spearhead the talks, with the White House deploying Biden advisor Steve Ricchetti and Office of Management and Budget Director Shalanda Young.[1] The Republicans are seeking to decrease federal expenditures and reverse significant Biden policy objectives, while the White House is advocating for an uncompromising debt ceiling legislation. Biden has expressed openness to at least one provision: raising the age people are required to work in order to receive welfare benefits, a sentiment that has raised alarms among progressive lawmakers.[1]
The debt ceiling is a cap on how much debt the federal government is allowed to accumulate.[2] Congress is constitutionally required to authorize the issuance of debt, which then allows the government to borrow to meet its existing legal obligations like Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments.[3] The federal government technically hit the debt ceiling on January 19 of this year, and as it has multiple times before, Treasury has been using what it calls “extraordinary measures” to keep paying America's bills.[2] But now, the so-called “X-date,” by which the government will not be able to fulfill all of its obligations even with these financial maneuvers, is rapidly approaching, with Treasury Secretary Janet Yellen estimating the country could hit it as early as June 1.[2]
Republicans are demanding sharp federal spending cuts to be tied to a bill to raise the limit, while President Biden and Democrats have sought to limit the cuts. In the past, Biden advocated for a standalone bill that solely raises the ceiling in a clean manner.[4] A minimum of 11 Senate Democrats are urging President Biden to utilize his constitutional authority under the 14th Amendment to increase the country's debt limit without needing to involve Congress.[5]
As time rapidly dwindles for legislators to reach a debt ceiling agreement, the two parties engage in a contentious exchange, with the unprecedented possibility of default looming.[6] According to Kevin McCarthy, a settlement must be made before the weekend concludes so that both the House and Senate can pass it before June 1.[6] Lawmakers are facing a rapidly approaching deadline to either lift or suspend the debt ceiling, and timing is crucial to avoid the risk of default.[6]
The movement came about seven hours after Rep. Garret Graves, who was tapped by House Speaker Kevin McCarthy to lead the negotiations with White House staff, told reporters “we decided to press pause” because their morning meeting was “just not productive.” Debt talks briefly broke down on Friday as negotiators for the two sides reached an obstacle, with Republicans accusing the White House of being “unreasonable.” They resumed on Friday evening for the sides to discuss “where things need to be.”
The federal government technically hit the debt limit in January and extraordinary measures have kept payments flowing since then.[7] Although experts cannot determine the exact date when funds will be depleted, they can provide a rough estimate that suggests it will happen within the general timeframe of early June to possibly as late as July or August.[3] As the negotiations continue, both parties must find a way to address the debt ceiling issue before the country faces the risk of default, which could have significant implications for the economy and the financial well-being of Americans.
0. “President Biden, House Speaker McCarthy: A debt ceiling deal is in the works” Detroit Free Press, 20 May. 2023, https://www.freep.com/story/money/business/2023/05/20/president-biden-house-speaker-a-debt-ceiling-deal-is-in-the-works/70226809007
1. “Critical Debt Ceiling Talks Back On After Sudden Pause, McCarthy Says” Forbes, 19 May. 2023, https://www.forbes.com/sites/saradorn/2023/05/19/critical-debt-ceiling-talks-back-on-after-sudden-pause-mccarthy-says
2. “The high-stakes debt ceiling fight could be a $12 trillion blow to the American economy: Here are 3 disasters a default would trigger” Yahoo Finance, 20 May. 2023, https://finance.yahoo.com/news/high-stakes-debt-ceiling-fight-110000223.html
3. “Nine questions you may have about the debt ceiling” NPR, 15 May. 2023, https://www.npr.org/2023/05/15/1175733139/debt-ceiling
4. “Two-thirds of Americans very concerned about potential debt limit breach” The Hill, 20 May. 2023, https://thehill.com/business/economy/4013421-two-thirds-of-americans-very-concerned-about-potential-debt-limit-breach
5. “Debt ceiling: Why is Biden being asked to invoke the 14th Amendment? – POLITICO” POLITICO, 19 May. 2023, https://www.politico.com/news/2023/05/19/14th-amendment-biden-debt-ceiling-00097932
6. “McCarthy says debt ceiling negotiations paused until Biden returns” ABC News, 20 May. 2023, https://abcnews.go.com/Politics/debt-ceiling-talks-end-after-briefly-resuming/story?id=99459051
7. “Debt ceiling talks back on after GOP briefly halted negotiations” NBC News, 19 May. 2023, https://www.nbcnews.com/politics/congress/clock-ticks-debt-default-gop-negotiators-press-pause-rcna85275
