White House and House Republicans Reach Tentative Deal to Raise Debt Ceiling and Cap Spending
As the deadline for the United States' first-ever default looms, the White House and House Republicans have reached a tentative deal to raise the debt ceiling for two years and cap spending. The agreement in principle follows weeks of negotiations between President Biden and House Speaker Kevin McCarthy over the looming deadline to raise the debt ceiling. The debt ceiling is the limit on the amount of money the US government can borrow to pay its bills, and raising or suspending the debt ceiling becomes necessary when the government needs to borrow money to pay its debts.
Congress used to regularly increase the debt ceiling, but this has changed in recent times. Congress has made 78 interventions since 1960 to alter it in some manner. The reason it has turned into a political conflict is due to its status as a must-pass bill, which Republicans have perceived as a chance to impose their demands. Republicans have maintained that any legislation that increases the debt ceiling must encompass significant expenditure reductions and the implementation of job-related prerequisites for those who receive government aid. Biden's preference is for a debt ceiling increase bill with no conditions, also known as a “clean” bill. Despite weeks of intense negotiations, little progress has been made towards reaching a deal by the two parties. In essence, the two sides are engaged in a dangerous game of brinkmanship with the entire national economy at stake, as each is hoping that the other will blink first rather than risk a catastrophic financial meltdown.
If the debt ceiling isn’t raised by June 5, the US won’t have the legal authority to pay for spending it has already committed to, like Medicare and Social Security payments. In other words, the US would be forced to default on its debt — which would have a catastrophic impact on the economy. In the event of a stock market crash, countless individuals may face job loss.
Biden reiterated his desire for Congress to approve an increase in the debt ceiling without imposing any conditions. However, the House Republicans passed a bill in the previous month that will increase the debt ceiling if spending cuts are implemented. The White House engaged in talks with GOP negotiators using the proposal as a basis. Biden had maintained that his administration would not engage in negotiations regarding the debt ceiling. However, once June 1 was established as the deadline, negotiations on federal spending commenced under his administration – a process that officials asserted was occurring simultaneously with the raising of the debt ceiling.
McCarthy and Biden spoke by phone on Saturday evening, and after hammering out the final details over the phone, they seem to have moved closer to a deal that would allow the debt ceiling to be raised. McCarthy expressed that there is still a substantial amount of work to be done; however, he trusts that this agreement in principle is deserving of the American public, stated on Saturday night.
However, the deal is far from certain, and McCarthy faces challenges as he works to secure support from his party. Around two to three dozen lawmakers, a vital faction of the Republican Conference, will only endorse the Limit, Save, Grow Act approved by the House recently, and nothing less. These individuals have put their political standing at risk by refusing to give in to the Democrats and are determined to hold their ground. Additionally, in the event that the speaker is perceived to have made excessive concessions on a compromise that was never going to receive their support, McCarthy may encounter a revolt from the ultraconservative faction of his party. If that were to occur, his tenure as speaker may come to an end in just a few months of starting.
McCarthy can only afford to lose five votes by a narrow margin on any debt-limit deal that he negotiates. This implies that he requires backing from a minimum of House Democrats to ensure approval. The agreement must also avoid granting excessive concessions to conservatives, as this would dissuade Democrats from supporting McCarthy's efforts to pass it.
McCarthy restated the House's commitment to the 72-hour rule, despite the urgency to tackle the debt limit. This rule allows House members to review a bill for 72 hours after its text is finalized before casting their vote. If Sen. Mike Lee, R-Utah, is not content with the conditions of the agreement, he has warned that he will obstruct a prompt Senate vote, which implies that the chamber may have to navigate procedural obstacles for several days before voting.
Overall, the tentative deal to raise the debt ceiling and cap spending is a step in the right direction. However, the deal is still subject to approval from Congress, and the timeline to avoid a default remains tight. The US government must raise the debt ceiling before the June 5 deadline to avoid a catastrophic default that could have severe consequences for the economy.
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