The president of USA Joe Biden and the president of the House of Representatives kevin mccarthy They met on Monday after a weekend of on-and-off negotiations over raising the country’s debt limit and within days of the government running out of money to pay its bills.
Both sides are working to reach a budget agreement before June 1, when, according to Treasury Secretary Janet Yellen, the country could default.
Speaking to the press after the meeting, McCarthy said they still haven’t reached an agreement, but the meeting was “positive.” Biden endorsed what was said in his own statement from him after the meeting in the Oval Office.
“We reiterate once again that default is not up for discussion and that the only way to move forward is to work in good faith toward a bipartisan agreement,” Biden said. His negotiators will continue to meet.
McCarthy and the Republicans insist on spending cuts in exchange for raising the debt limit. Biden has come to the negotiating table after hesitating for months, but says Republican lawmakers will have to put aside their “extreme positions.”
Negotiators met again late Sunday and appeared to be nearing a fiscal 2024 deadline that would clear the impasse. After speaking with Biden by phone as the president returned home from a trip to Asia, McCarthy was somewhat optimistic. But he warned that “there is no agreement on anything.”
Here’s a look at the negotiations and why they’re happening:
WHAT IS THE DEBT LIMIT DISPUTE ABOUT?
The vote to increase the debt limit allows the Treasury Department to continue borrowing money to pay the country’s already high bills.
Although it was once a routine procedure in Congress, the most recent votes have been used to exert political pressure, since it is a mandatory approval initiative, other priorities can be added to it.
House Republicans, empowered by their majority in the House, refuse to raise the debt limit unless Biden and the Democrats impose federal spending cuts and restrictions on future spending.
Republicans say the national debt, currently at $31 trillion, is unsustainable. They also want to attach other priorities, such as stricter work requirements for recipients of government cash aid, food stamps and the Medicaid health care program. Many Democrats are against these requirements.
Biden has insisted that the debt limit be approved without major commitments, ensuring that the United States always pays its debts and that a debt default is non-negotiable.
But with the June 1 deadline approaching, when the Treasury says it will run out of money, Biden began negotiations with the Republicans.
IS IT CLOSE TO RESOLVING?
There are signs of optimism, although there have also been turbulent times during the negotiations.
On-again, off-again talks resumed Sunday night, and both sides appear headed for an agreement. The negotiators left the Capitol after 8 p.m. Sunday and said they would keep working.
After his phone conversation with Biden, McCarthy commented: “I think we can solve some of these problems if he understands what we want.”
“We have to spend less than what we spent last year,” added the legislator.
Biden, for his part, said during a press conference in Japan before returning to the country that: “I think we can make an agreement.”
But reaching an agreement is only part of the problem. Any deal will also have to pass in the House of Representatives and the Senate with significant bipartisan support. Many hope that the approval of the White House and the Republican leadership will be enough to materialize it.
WHAT ARE THE OBSTACLES?
Republicans want to return to the 2022 level of spending and place a cap on future spending for the next decade.
Democrats aren’t willing to go to such lengths to cut federal spending. Instead, the White House has proposed keeping spending at current levels by 2023.
Political priorities are also being weighed, including measures that could help speed construction and development of energy projects desired by both Republicans and some Democrats.
Democrats have strongly opposed Republican attempts to impose stricter work requirements for people who receive government cash assistance, food stamps and Medicaid health care.
Biden, however, has kept the door open to discuss some of the job requirements.
WHAT HAPPENS IF THE DEBT LIMIT IS NOT RAISED?
A government default would be unprecedented and devastating for the country’s economy. Yellen and economic experts have said it could be “catastrophic.”
There really is no manual for what might happen. But it would have far-reaching repercussions.
Yellen has said it would destroy the job market and businesses, and millions of families who depend on payments from the federal government “would possibly not receive their payments,” including Social Security recipients, veterans and military families.
More than 8 million people could lose their jobs, according to estimates by government officials. The economy could plummet into a recession.
“A default could cause widespread suffering as Americans lose the income they need to survive,” he said. Disruptions in federal government operations could affect “air traffic control and security, border security and national defense, and food security.”
IS THERE A PLAN B?
Some Democrats have proposed that they could raise the debt limit without help from Republicans.
Some progressives have urged Biden to invoke a clause of the 14th Amendment that says the validity of the public debt in the United States “should not be questioned.” Therefore, non-compliance would be unconstitutional, according to the argument.
Supporters of unilateral action say Biden already has the authority to overturn the debt limit if Congress fails to raise it, so the validity of the national debt is not called into question. As for whether he could act alone, the president said Sunday that it is “a question that I think has not been resolved,” adding that he hopes the judiciary can make a determination on the matter for the future.
Meanwhile in Congress, House Democratic leader Hakeem Jeffries has launched a process that would send the issue to the full House of Representatives and force a vote on raising the debt ceiling.
It’s a cumbersome legislative process, but Jeffries urged House Democrats to pass the measure in hopes of getting the majority needed to bring it to a vote.
The problem for the Democrats is that they only have 213 members on their side, five fewer than the 218 needed for a majority.
Convincing five Republicans to join his cause will not be easy. Approving a minority petition is considered a great affront to the party leadership, especially on an issue as important as the debt ceiling. Few, if any, Republicans would be willing to suffer the consequences.