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U.S. House Speaker McCarthy talks to reporters at the U.S. Capitol in Washington.
Debt ceiling deal comes down to the wire
There was much relief after President Joe Biden and House Speaker Kevin McCarthy announced on Saturday night that they’d agreed to raise the debt ceiling and avoid a default in the world’s largest economy by June 5, the date Treasury Secretary Janet Yellen says the US will run out of money to pay back its debts. But it’s clear that the ongoing crisis will come down to the wire. (For more on what’s in the proposed bill, see here.)
On Tuesday night, the bill narrowly passed in the House Rules Committee – a procedural step required before any legislation can be brought for a vote in the House. Two ultraconservative GOP lawmakers on that committee (out of nine) voted against the bill’s advancement. House lawmakers are now expected to vote on the bill this afternoon.
Yet again, McCarthy is experiencing the perils of presiding over a razor-thin majority in the lower chamber as he tries to corral Republican support for the bill that several dozen lawmakers from the far-right Freedom Caucus say gives too much away to the Dems. McCarthy needs a majority of 218 votes to get the bill through, meaning that dozens of Dems will need to back the legislation to move it along to the Senate for a vote. And making matters harder, he needs a majority of the majority – aka Republicans – to back the deal so as not to lose the confidence of his caucus and GOP leadership and risk being ousted from the job.
Meanwhile, progressive House Dems, many of whom are furious at the Biden administration for raising some work requirements for needy families receiving food benefits, are playing their cards close to their chests.
Biden returns to join US debt ceiling talks
US President Joe Biden is on his way back from the G-7 summit in Japan to Washington, DC, where on Monday he plans to meet with House Speaker Kevin McCarthy to iron out a compromise over the debt ceiling. Biden nixed the last two legs of his trip — to Papua New Guinea and Australia — to join the talks in the hope of avoiding a catastrophic default as early as June 1.
With that hard deadline fast approaching, the two sides have moved a bit closer yet remain far apart. Republicans want sweeping spending cuts, including work requirements on beneficiaries of food stamps, while the Dems are offering to keep defense spending flat. McCarthy is under as much pressure to not cave from the penny-pinching far right of the GOP as Biden is from free-spending progressives.
The fact that the president — who for months has refused to join the debt ceiling talks — is meeting McCarthy for the second time in two weeks signals that the White House can no longer delay nor expect to get a deal without giving up something. Still, as Eurasia Group's US Managing Director Jon Lieber points out, that won't matter as long as enough Republicans believe that the US can stave off a default by choosing to pay off some creditors and not others.General view of the US Department of the Treasury in Washington, DC.
US debt ceiling looms over a House divided
The US government surpassed its debt ceiling early Thursday, prompting the US Treasury Department to implement a series of temporary emergency measures to avoid a US government default. What does this mean and why does it matter?
What’s the debt ceiling? It’s the maximum amount the US government can borrow to pay its bills. Essentially, the US government runs at a deficit, meaning it spends more than it makes from taxes. The US debt ceiling, created as a safeguard against overspending and overtaxation, has been raised 102 times since 1945, with the last increase raising the total amount to $31.4 trillion.
Raising the debt limit was rarely a partisan issue, until 1995, when the Republican-controlled House, led by Speaker Newt Gingrich, refused to fund President Clinton’s budget, leading to two government shutdowns. This set the scene for the ensuing political brinkmanship over the debt ceiling, which culminated in the 2011 faceoff between President Barack Obama and House Republicans, leading to the first-ever downgrading of the US government’s credit rating.
What happens if the government defaults on its debt? If Congress fails to increase the debt ceiling the US government will be forced to default on its loans for the first time in history. Not only would this shake investor confidence in US bonds, raising the prospect of a US recession, but because US debt is the cornerstone of the global economy – particularly amid the current global inflationary climate — it could also spark a global financial calamity.
So, what’s the holdup then? Politics, of course. Republicans, who hold a slim majority in the House, are refusing to raise the debt ceiling without a guarantee from the Biden administration that it will cut back on spending. (To be clear, economists say that Republican tax cuts in recent years in conjunction with Democratic spending contributed to the current deficit.) The White House, for its part, says that playing politics with something as delicate as the debt ceiling sets a dangerous precedent and has called on the GOP to greenlight an increase without pre-conditions.
What happens next? US Treasury Secretary Janet Yellen has said the agency will continue to deploy some accounting wizardry, which would buy the government time until June. If the problem hasn’t been fixed by the summer, however, the government could face a partial shutdown — and even default.
A seasoned politician, Biden will try to corral moderate Republicans into a deal. But House Speaker Kevin McCarthy — who recently underwent an embarrassing leadership vote and just scraped over the finish line — has his work cut out for him in convincing fiscal hawks in his party to come on board.- Senator Mitt Romney on Tiktok: shut it down - GZERO Media ›
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