The “state of the union” may hinge on Biden, McCarthy meeting on debt ceiling
WASHINGTON (Gray DC) - Days before his State of the Union Address, Republican House Speaker Kevin McCarthy is signaling that he believes Republicans can reach a deal with the President on raising the debt ceiling. President Joe Biden met with McCarthy Wednesday to gain clarity on what GOP lawmakers want to negotiate before they will agree to act. Experts have warned if no deal is reached, the country could go into default.
The nation reached its more than $31 trillion federal government borrowing limit in January. The only solution to avoid default is to raise the debt ceiling. Yet before acting on the measure, Republicans insist this is the moment to negotiate overall federal spending.
“It’s concerning each time we come up against the debt limit because we are dealing with the full faith and credit of the United States,” said Shai Akabas of the Bipartisan Policy Center. “This year in particular, it’s disconcerting what’s going on in the political realm where you have a lack of unity and political discord, certainly within the Republican Party. And frankly, in some areas of the Democratic Party as well in terms of what they are calling for in these debt limit negotiations. When there is a lack of clarity around who is leading the negotiations on either side, it creates an additional level of uncertainty as to how this will all play out.”
Akabas warned if the United States goes into default, that could result in a drop in financial markets, downgrades from credit rating agencies, and higher interest rates.
As McCarthy left his meeting with the President, the Speaker said “he (the president) gave me his perspective. I gave him our perspective. But, I believe in hearing both perspectives. Like anything else, be it in business, be it in family, be it in relationships that you can find common ground. There’s nothing in there with me walking away that does not believe at the end of the day, we can come to an agreement that makes America stronger, puts us on a path to balance, and (that’s) exactly what the American people are asking us to do.”
The White House released a statement calling the President’s discussion with McCarthy a ‘frank and straightforward dialogue.’ They said the President and the Speaker agreed to continue the conversation.
The White House said, “They covered a range of issues and President Biden underscored that he is eager to continue working across the aisle in good faith, after passing historic bipartisan laws during his first two years in office. President Biden made clear that, as every other leader in both parties in Congress has affirmed, it is their shared duty not to allow an unprecedented and economically catastrophic default. The United States Constitution is explicit about this obligation, and the American people expect Congress to meet it in the same way all of his predecessors have. It is not negotiable or conditional. The President welcomes a separate discussion with congressional leaders about how to reduce the deficit and control the national debt while continuing to grow the economy. This conversation should build on the President’s leadership in delivering a record $1.7 trillion in deficit reduction in his first two years in office.”
The U.S. Treasury Department is currently using ‘extraordinary measures’ to keep the nation from going into default. However, those measures are only expected to last until this summer.
“Once those extraordinary measures and the reserves that the Treasury Department has on hand run out, that’s when we will reach what we at the Bipartisan Policy Center call the X date, which is when the government no longer can meet all of its obligations in full and on time. And at that point, we would be failing to pay someone who we owed money to,” said Akabas.
Democrats on the Hill argue Republicans want to negotiate money that’s already been spent. The constitution requires all public debt-borrowing by the federal government to be repaid.
“The U.S.can’t default on its debts. We have to pay our credit cards. We have since we’ve been a nation. And I really object to using the debt ceiling as, oh, great, we can get something out of you. No, you’re not going to get something out of me for that, for America paying its bills. I mean, America should pay its bills,” said Sen. Tim Kaine (D-Va.). He later added, “if the Republican House members really want to talk about spending cuts, they control the House. And we’re doing that. We’re already working on the next budget. So, they could just pass a budget that shows Americans what they want to cut.”
Other Democrats accuse Republicans of using the debt ceiling debate as a pathway to negotiate cuts to programs such as Social Security.
Rep. Ben Cline (R-Va.), who sits on the appropriations committee, counters that argument.
“We want to have a conversation with this administration. We are not interested in cutting Social Security or Medicare. All my constituents who depend on Social Security and Medicare know that I am up here defending those programs. But we have to make sure that they are available long term for citizens,” he said.
Cline adds legislation, originally sponsored by the Democrats, such as the ‘Inflation Reduction Act’ and ‘American Rescue Plan’ increased the federal debt.
“We recognize that we can’t default on the credit of the United States, but we also expect that the President should be willing to come to the table and simply declaring no talking, no negotiation, that’s not a reasonable position. And so, we hope that he will engage with Congress on the issue and actually have a conversation that’s important to the future of the country and the American people,” said Cline
When Cline was asked where the federal budget could be cut, he said “well, that’s part of the negotiation. This is about bending the curve long term to make sure that we don’t continue to add trillions and trillions in debt on families, that it ends up flowing down to increased prices at the grocery store, increased prices at the gas pump, prices for used cars. All of these things are fed by inflation. That is, fed by Democrat-led spending. And, that’s what we have to get under control long term.”
Congress has always acted when it’s called on to raise the debt limit. Since 1960 it has raised or revised the debt ceiling 78 times. Twenty-nine of those were under Democratic Presidents. Forty-nine of those were under Republican Presidents.
The President delivers his State of the Union speech on Tuesday.
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