US Debt Ceiling Negotiations Hit Roadblock as Democrats and Republicans Disagree on Spending Caps
The ongoing negotiations between the Democrats and Republicans to raise the US debt ceiling have hit a roadblock, with Republicans announcing a pause in the talks on Friday. The White House and Republicans resumed talks on Friday evening after frustrated GOP negotiators hit pause for much of the day.[0] In January, the $31.4tn debt limit—the amount of debt the US government can hold—was reached.[1] That means US cash reserves could be exhausted by June 1 according to Treasury Secretary Janet Yellen.[2] Should Republicans and Democrats fail to act, the US could default on its debt, causing harmful effects across the financial system.[3]
The discussions have been complicated by disagreements between the two parties on spending caps for next year.[4] The Republicans are adamant about implementing a spending cap for the upcoming year that surpasses a mere freeze on the present top-line figure and instead reduces government spending to the levels of 2022. Republicans seek to cap overall discretionary spending at fiscal year 2022 levels while allowing for 1% growth per year for ten years. Critics of the proposal argue that the GOP's refusal to reduce defense spending, which accounts for approximately 50% of discretionary spending, would result in a severe reduction in important domestic programs.[5]
At least eleven Senate Democrats are urging President Joe Biden to invoke what they say is his constitutional authority under the 14th Amendment to raise the nation’s debt limit without having to go through Congress. Some of the senators include Tina Smith (D-Minn.), Bernie Sanders (I-Vt.), Ed Markey (D-Mass.[6]Jeff Merkley of Oregon and Elizabeth Warren of Massachusetts, both Democrats.[6] The 14th Amendment of the Constitution states that the validity of the public debt of the United States, authorized by law, shall not be questioned.[6] A group of Senate Democrats is advising Biden to be ready to utilize the 14th Amendment to elevate the debt ceiling without relying on Congress.
On Friday, 66 members of the Congressional Progressive Caucus urged Biden to opt for a solution based on the 14th Amendment of the Constitution instead of a poor agreement. Among the lawmakers were Pramila Jayapal (D-Wash.), the Chair of the Congressional Progressive Caucus, as well as Ilhan Omar (D-Minn.) and Greg Casar (D-Texas).[6] Biden earlier this month said he’s “considering” using the 14th Amendment as a means to circumvent the debt ceiling, though he cast some doubt on whether it could work. Biden has said he sees a bipartisan deal as the only option to the current standoff, casting doubt on the 14th Amendment as workable in public remarks.[7]
It is uncertain whether the House would approve a potential agreement between Biden and McCarthy.[8] Biden's apparent surrender to Republicans has not been met with much objection from Democrats, and there has been little reaction to the discussions.[8] The possibility of adding work requirements to social safety-net programs, which would go against progressive beliefs, is being openly considered by the president, indicating a potential shift in stance.[8] Despite the absence of a substantial primary opposition to Biden's bid for reelection, it has provided him with the flexibility to engage in negotiations, while Democrats express concern about the potential impact of a default on the president's already fragile public image.[8]
In his public remarks, Biden has expressed his belief that a bipartisan agreement is the sole solution to the current stalemate, undermining the feasibility of the 14th Amendment. Progressives are concerned that the president is surrendering his leverage too easily, as his aides' private resistance has been a source of frustration.[9] The situation also poses a risk of causing division within the party's support for Biden's debt ceiling plan, leaving the White House open to mounting opposition at a crucial point in the intense confrontation with the GOP.[9]
The speaker failed to obtain any significant promises from Biden, lacking anything tangible to present to his party.[8] McCarthy has obtained a significant agreement from the president, which must be met before any additional concessions can be made.[8] Despite this, Biden struck an optimistic note on Sunday, telling reporters, “I really think there’s a desire on [Republicans’] part, as well as ours, to reach an agreement, and I think we’ll be able to do it.” But McCarthy is sounding more dour.[8] Yesterday morning, he informed NBC News that he believed they were still distant from each other.[8] The speaker cautioned that an agreement must be reached by the weekend for the House and Senate to have enough time to discuss and approve it by early June. They further stated that Biden had not shown sufficient seriousness towards the matter.[8]
In the end, the negotiations will come down to the wire, with the fate of the US economy hanging in the balance.
0. “Debt ceiling talks resume despite GOP frustrations” The Hill, 19 May. 2023, https://thehill.com/homenews/house/4012954-debt-ceiling-negotiations-update
1. “What is the US debt ceiling and what will happen if it is not raised?” The Guardian, 30 Apr. 2023, https://www.theguardian.com/business/2023/may/16/what-is-debt-ceiling-limit-explainer
2. “Debt ceiling deadlock centers on 2024 spending levels” Axios, 19 May. 2023, https://www.axios.com/2023/05/19/debt-ceiling-2024-spending-levels
3. “Charting the Rise of America's Debt Ceiling” Visual Capitalist, 17 May. 2023, https://www.visualcapitalist.com/rise-of-americas-debt-ceiling/
4. “Debt ceiling talks resume after Republicans trigger brief pause” CNBC, 19 May. 2023, https://www.cnbc.com/2023/05/19/debt-ceiling-republicans-pause-negotiations-with-white-house.html
5. “‘Pause' lifted, debt limit talks back on” Roll Call , 19 May. 2023, https://www.rollcall.com/2023/05/19/graves-debt-limit-talks-on-pause/
6. “Debt ceiling: Why is Biden being asked to invoke the 14th Amendment? – POLITICO” POLITICO, 19 May. 2023, https://www.politico.com/news/2023/05/19/14th-amendment-biden-debt-ceiling-00097932
7. “What to Know About the History of the Debt Ceiling” TIME, 18 May. 2023, https://time.com/6281003/debt-ceiling-history
8. “Biden Has Already Caved on the Debt Ceiling” The Atlantic, 16 May. 2023, https://www.theatlantic.com/politics/archive/2023/05/biden-gop-debt-ceiling-negotiation/674070/
9. “Biden's 14th Amendment message on the debt ceiling: It won't happen – POLITICO” POLITICO, 19 May. 2023, https://www.politico.com/news/2023/05/19/biden-14th-amendment-debt-ceiling-00097930
