On Tuesday, Democratic President Joe Biden and senior legislative Republican Kevin McCarthy will meet to try to reach an agreement to increase the $31.4 trillion debt ceiling and avoid an economic disaster.
Dealing is urgent. On Monday, the U.S. Treasury Department reaffirmed its warning that it could run out of money to pay all its obligations by June 1, triggering a default that economists say would cause a significant economic downturn.
For months, Republicans, who control the House by a 222-213 majority, have demanded that any expansion in the government’s self-imposed borrowing cap be connected to expenditure cuts. According to sources, both sides’ staffs have discussed spending caps and energy-permitting modifications in exchange for votes to lift the ceiling in the past week.
McCarthy said Monday that despite White House claims, the discussions had made little progress.
“If you look at the timeline to pass something in the House and pass something in the Senate, you’ve got to have something done by this weekend,” McCarthy told reporters. “And we are nowhere near any of that.”
After Thursday’s session, the House will leave Washington for a week-long recess as Biden attends a Group of Seven conference in Japan.
Senate Majority Leader Chuck Schumer, who will attend Tuesday’s White House meeting, said conversations were “serious.”
After raising the debt ceiling three times under Trump, he chastised Republicans for preventing it.
“Default must be taken off the table,” Schumer declared on Monday’s Senate floor. “Don’t touch it. Never flirt with it. Because default’s implications are horrible, no one should take it hostage and say unless you do this, we’ll default.”
A 2011 impasse caused a historic reduction of the U.S. credit rating, which caused equities to fall and raised borrowing rates.
Investors are jittery, bringing the cost of insuring exposure to U.S. government debt to record highs, and a Monday Reuters/Ipsos poll revealed that three-quarters of Americans worry a default would hurt households like theirs.
Comment Template