US Debt Ceiling Talks Stall Between President Biden and House Speaker McCarthy
President Joe Biden and House Speaker Kevin McCarthy are still at odds on how to deal with the government’s $31.4 trillion debt ceiling. With just 10 days left before a possible default that could sink the US economy, the Biden administration and congressional Republicans are struggling to reach an agreement. In this article, we will explore the reasons behind the impasse and the consequences of a default.
The two sides are far apart on several issues. McCarthy wants spending cuts to be included in the federal budget while the President is pushing for new taxes that the Republicans have rejected. The Republican Speaker is focused on reducing spending in the 2024 federal budget. Republicans want discretionary spending cuts, new work requirements for some programs for low-income Americans, and a clawback of COVID-19 aid approved by Congress but not yet spent in exchange for a debt ceiling increase, which is needed to cover the costs of lawmakers’ previously approved spending and tax cuts. Democrats want to hold spending steady at this year’s levels in 2024, while Republicans want to return to 2022 levels next year and cap spending growth in the years ahead.
Democrats and Republicans have until June 1 to increase the government’s self-borrowing limit or trigger an unprecedented debt default that economists warn could bring on a recession. A failure to lift the debt ceiling would shake financial markets and drive interest rates higher on everything from car payments to credit cards.
Both sides have stressed the need to avoid default with a bipartisan deal after last Monday evening’s meeting, however, and signaled that they’ll be talking regularly in the coming days. It will take several days to move legislation through Congress if and when President Biden and Speaker McCarthy come to an agreement. McCarthy said that a deal must be reached this week for it to pass Congress and be signed into law by President Biden in time to avoid default.
White House Negotiators Resume Talks
White House negotiators were returning to Capitol Hill on Monday night to resume talks. President Biden reiterated once again that default is off the table, and the only way to move forward is in good faith toward a bipartisan agreement. McCarthy told reporters after over an hour of talks with the President that negotiators are “going to get together, work through the night” to try to find common ground.
Both sides must also weigh any concessions with pressure from hardline factions within their own parties. Some far-right House Freedom Caucus members have urged a halt to talks, demanding that the Senate adopt their House-passed legislation, which has been rejected by Democrats. McCarthy, who made extensive concessions to right-wing hardliners to secure the speaker spot, may risk being removed by members of his party if they do not like the deal he cuts.
The President and the House Speaker still need to find a way to reach an agreement before the June 1 deadline. The consequences of not raising the debt ceiling are dire and could lead to a recession. The sticking points remain around spending cuts and tax hikes that both parties cannot agree on. These disagreements must be worked out, or both sides risk a worse outcome. Negotiations must continue until a suitable compromise is reached.
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