WASHINGTON — President Joe Biden will meet with congressional leaders Tuesday as Washington scrambles to lift the debt ceiling with lower than a month before the federal government is about to expire of cash.
While the stakes are high for the meeting, expectations were low within the hours ahead of the 4 p.m. huddle.
House Speaker Kevin McCarthy said he would reject any White House proposal for a three-month debt ceiling deal that will avoid default and provides the 2 sides additional time to barter a comprehensive budget and borrowing limit agreement. Government spending runs out at the top of September.
“No, no, no. We shouldn’t kick [negotiations] out. Let’s just get this done now,” McCarthy told NBC News on Tuesday.
The California Republican — whose support Biden will almost actually need with the intention to pass a debt limit bill within the House — said he hoped the president’s “attitude has modified.” McCarthy referenced the nearly three months that passed between the House speaker’s first face-to-face meeting on the debt limit with Biden in February and Tuesday’s event.
This time, the opposite three top congressional leaders will attend: Senate Majority Leader Chuck Schumer, D-N.Y.; Senate Minority Leader Mitch McConnell, R-Ky.; and House Minority Leader Hakeem Jeffries, D-N.Y.
The Senate Republican caucus is in “the exact same position because the House Republicans,” going into the talks, said McCarthy. “They wish to give you the option to see that we will raise the debt ceiling, and we have a plan that works for that. They’re 100% behind it.”
Lifting the debt ceiling is needed for the federal government to cover spending commitments already approved by Congress and the president and stop default. Doing so doesn’t authorize recent spending. But House Republicans have said they may not lift the limit if Biden and lawmakers don’t conform to future spending cuts.
The White House has stressed that while it’s open to debate spending cuts, it should not negotiate with Republicans on the debt ceiling. The Biden administration has said the GOP has a constitutional responsibility to lift the borrowing limit.
“Those two are totally unrelated. Whether you pay the debt or not, doesn’t have a rattling thing to do with what your budget is,” Biden said Friday. “They’re two separate issues — two. Let’s get it straight.”
The Treasury Department has began to take extraordinary steps to maintain paying the federal government’s bills, and expects to give you the option to avoid a first-ever default at the very least until early June. Treasury Secretary Janet Yellen warned Monday that failure to hike the debt ceiling would cause an “economic catastrophe.”
Defaulting on sovereign debt would wreak havoc on the economy and roil markets around the globe. A Moody’s report last yr said a default on Treasury bonds could throw the U.S. economy right into a tailspin as bad because the Great Recession.
If the U.S. were to default, gross domestic product would drop 4% and 6 million employees would lose their jobs, Moody’s projected. Even a temporary default would result in the lack of 2 million jobs, in keeping with the info.
In that scenario, U.S. bond rankings can be classified as “restricted default,” in keeping with Fitch Rankings, and Treasurys would have a D rating until the U.S. could once more borrow. The Brookings Institution noted a default may lead to $750 billion in higher federal borrowing costs over the subsequent decade — a twist on condition that Republican concerns about spending and debt have helped to fuel the borrowing-limit stalemate.
What’s more, a default would shake the U.S. position on the world stage. U.S. Director of National Intelligence Avril Haines told the Senate Intelligence Committee last week that Russia and China will benefit from the U.S. potentially defaulting on its debt. Haines warned the 2 nations would attempt to focus on “the chaos inside america, that we’re not able to functioning as a democracy.”
With tight margins in each chambers of Congress, gridlock is nothing recent. But with regards to default ultimatums, the president has pleaded with lawmakers to interact in “normal arguments” as a substitute.
“As I’ve said all along, we will debate where to chop, how much to spend, how you can finally overhaul the tax system to where everybody has to pay their fair proportion or proceed the route their on, but not under the specter of default,” Biden said on Friday. “Let’s remove the specter of default. Let’s have normal arguments. That is why now we have a budget process to debate within the open so that you all can see it.”
But congressional Republicans are united of their refusal to vote to lift the limit without concessions. They view Tuesday’s meeting as a long-awaited face-to-face negotiation with the president.
If the meeting is indeed a negotiation, then the bill House Republicans passed last month effectively serves because the GOP’s opening offer to the White House.
Dubbed the Limit, Save and Grow Act, the bill would impose sweeping cuts to federal discretionary spending, impose recent work requirements for welfare recipients and expand mining and fossil fuels production, all in exchange for raising the debt limit for a few yr.
But fairly than provide a jumping off point for talks, the GOP bill has thus far served only as a political cudgel, energizing Democrats’ opposition to Republican demands.
Within the Senate, Schumer has attacked the bill on a near-daily basis ever because it was introduced.
The White House also has pointed to a few of the the bill’s most conservative proposals and cuts as evidence that Republicans are willing to let the nation default with the intention to slash spending from key programs.