Five big developments since Biden and McCarthy last met on the debt limit
Ryan King
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Despite President Joe Biden and House Speaker Kevin McCarthy (R-CA) making efforts to address the looming debt ceiling disaster since they met on Feb. 1, they don’t appear to have closed the yawning gap between their parties.
When the two meet Tuesday afternoon, along with the rest of the congressional leaders, both men will come to the table with clear public visions on how to raise the debt ceiling and are staring down an accelerated timeline until a government cash shortage, setting higher stakes for a breakthrough in the contentious standoff.
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Biden and McCarthy last met to discuss the debt ceiling in February. They are poised to meet at 4 p.m. Tuesday in the Oval Office along with Senate Majority Leader Chuck Schumer (D-NY), Senate Minority Leader Mitch McConnell (R-KY), and House Minority Leader Hakeem Jeffries (D-NY). Here are the biggest developments that have taken place since the prior meeting.
McCarthy passed a debt limit bill
For weeks, McCarthy demanded any debt limit hike be paired with spending cuts but seemed unable to lay out specifics of what he wanted. The White House seized on this and repeatedly taunted McCarthy over his lack of a plan to lift the debt ceiling.
“Show me his budget,” Biden said last month to reporters. “I don’t know what we’re negotiating if I don’t know what they want.”
Less than two weeks later, McCarthy passed the Limit, Save, Grow Act through the House, defying expectations from naysayers. The bill would lift the nation’s borrowing authority by $1.5 trillion or until March 31, 2024, whichever comes first, in exchange for spending cuts.
Biden quickly rejected the measure, but now, McCarthy has seemingly turned the tables on him, noting that Senate Democrats have been unable to pass a stand-alone debt limit bill to Biden’s liking.
Treasury Department moved up the timeline
Shortly after the United States bumped up against the $31.4 trillion debt ceiling in January, Treasury Secretary Janet Yellen projected the department’s “extraordinary measures” would last until June 5. The Congressional Budget Office was more optimistic and estimated the “X date” would be between July and September.
Since then, the window for making a deal has shrunk. Yellen now pegs June 1 as the possible deadline, and the CBO similarly revised up its estimates to early June. This was recently corroborated by the Bipartisan Policy Center, which determined a government cash shortage could come by early June.
This timeline complicates things, with Biden set to head abroad to Japan and Australia and members of both chambers of Congress set to adjourn at various times this month.
Senate Republicans backed McCarthy
Biden allies have reportedly sought to seize on the daylight between McCarthy and McConnell, as well as the Senate GOP broadly. But a group of 43 senators, including McConnell, sent a letter to Schumer on Saturday clarifying they are squarely behind the speaker.
“Our economy is in free fall due to unsustainable fiscal policies,” the letter said. “This trajectory must be addressed with fiscal reforms. Moreover, recent Treasury projections have reinforced the urgency of addressing the debt ceiling. The House has taken a responsible first step in coming to the table with their proposals. It is imperative that the president now do the same.”
McConnell has publicly maintained that the standoff is between Biden and McCarthy. He has vowed to “continue to lend my support to the speaker.”
Biden proposed a budget
Although Biden has been resolute that a debt limit hike must come from a “clean” bill, he has laid out spending parameters. In March, Biden proposed a $6.9 trillion budget, including several liberal wish-list items, such as bolstered spending for Medicare, prescription drug reform, child care spending, community college funding, and more.
Republicans quickly poured cold water on that proposal, but it helps illustrate what his objectives are on spending ahead of negotiations.
White House press secretary Karine Jean-Pierre said Biden plans to discuss spending with Republicans but wants talks about the budget to be separate from debt ceiling negotiations.
“President [Biden] will reiterate the need for Congress to act on the debt limit,” she said. “He will also discuss initiating a separate process to address the budget and appropriations because, as we have long said, we welcome a conversation about spending priorities while reining in wasteful spending.”
Democrats floated a discharge petition
House Democrats have renewed talks about working out a debt ceiling plan that doesn’t include McCarthy, though the effort appears unlikely to go anywhere as it would mean recruiting five Republicans to part ways with their party.
Jeffries said last week Democrats had filed a discharge petition, a “special rule” that would allow them to bring a bill to the floor for a vote.
“A dangerous default is not an option. Making sure that America pays its bills — and not the extreme ransom note demanded by Republicans — is the only responsible course of action,” Jeffries said. “[T]he filing of a debt ceiling measure to be brought up on the discharge calendar preserves an important option.”
However, in addition to requiring pulling Republicans across the aisle, Jeffries and the Democrats can’t start collecting signatures on the petition until May 16.
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Biden and McCarthy’s talk Tuesday comes amid mounting fears of an economic calamity. Should the U.S. run out of cash and default on its debt obligations, it runs the risk of skyrocketing inflation and unemployment.
Alternatively, it could trigger a constitutional battle as Yellen has begrudgingly kept the door open for going around Congress to meet the government’s financial obligations.