President Biden and House Speaker Kevin McCarthy (R-CA) are set to meet again Tuesday afternoon to pick up where they left off on talks to avoid defaulting on the federal debt.
They, along with the Senate’s Majority Leader Chuck Schumer (D-NY) and Minority Leader Mitch McConnell (R-KY) as well as House Minority Leader Hakeem Jeffries (D-NY), had been scheduled to meet again last Friday. However, following last Tuesday’s White House meeting between the leaders, their Friday follow-up was postponed while negotiations continued behind the scenes.
Staff from both sides have been working daily since last Tuesday to try to come up with a deal to raise the debt ceiling before June 1, which Treasury Secretary Janet Yellen has said could be the day the government runs out of money.
The non-partisan Congressional Budge Office (CBO) is slightly more optimistic, estimating the U.S. will run out of money on June 15.
Not reaching a deal before that happens would be “catastrophic,” Yellen has warned.
“Household payments on mortgages, auto loans, and credit cards would rise, and American businesses would see credit markets deteriorate.” she has previously warned. “On top of that, it is unlikely that the federal government would be able to issue payments to millions of Americans, including our military families and seniors who rely on Social Security.”
Wall Street analysts have further noted that a stock market plunge as a result of debt default could wipe out 6 million jobs and $15 trillion in wealth.
Biden said on Sunday, “I really think there’s a desire on their part, as well as ours, to reach an agreement, and I think we’ll be able to do it.”
Yet McCarthy has countered, “It doesn’t seem to me yet that they want a deal…They’re not talking anything serious.”
Though the debt ceiling has been raised cleanly, without any strings attached, in years past, House Republicans have passed legislation that ties a short-term debt ceiling hike to decade-long spending cuts.
The bill, which passed in the House along partisan lines, includes cuts to veterans’ benefits and work requirements for Medicaid recipients. As-is, Schumer has declared it dead on arrival in the Democratic-controlled Senate.
McConnell, who insisted in January that “America must never default on its debt. It never has, and it never will,” has also signaled that he won’t rescue Democrats in the negotiations, having reportedly told the President in private that it was up to Biden and McCarthy to come to an agreement.
All but six Republican Senators—Susan Collins of Maine, Lisa Murkowski of Alaska, Mitt Romney of Utah, Rand Paul of Kentucky, Josh Hawley of Missouri and John Kennedy of Louisiana—have vowed to oppose raising the debt ceiling without “substantive spending and budget reforms.”
The federal government hit its $31.4 trillion debt limit on January 19, after which the U.S. Treasury undertook what Secretary Janet Yellen called temporary, “extraordinary measures” to prevent defaulting on the debt.
The United States has never defaulted on its debt. But it has repeatedly come close, perhaps most notably in 2011 when the U.S. suffered its only credit rating downgrade in its history, amid the rise of the conservative tea party movement in the House.