The two sides are working to reach a budget compromise before June 1, when Treasury Secretary Janet Yellen said the country could default.
McCarthy and the Republicans insist on cutting spending in return for raising the debt limit. Biden came to the negotiating table after being rebuffed for months but said Republican lawmakers would have to back down from their “extreme positions.”
on Sunday evening, negotiators He met again and seemed to be narrowing the ceiling of the 2024 budget that could solve the confrontation. After speaking with Biden on the phone as the president drove home from a Journey to AsiaMcCarthy sounded somewhat optimistic. But he warned that “there is no agreement on anything.”
A look at the negotiations and why they happen:
What is the debt ceiling fight all about?
Once a routine measure by Congress, a vote to raise the debt ceiling allows the Treasury Department to continue borrowing money to pay bills the country is already owed.
The vote has recently been used as a political pressure point, and a must-have bill that could be loaded with other priorities.
House Republicans, newly empowered with a majority in this Congress, refuse to raise the debt limit unless Biden and the Democrats impose federal spending cuts and limits on future spending.
Republicans say the country’s debt, now at $31 trillion, is unsustainable. They also want to attach other priorities, including stricter work requirements on state cash aid recipients, food stamps, and the Medicaid health care program. Many Democrats oppose these requirements.
Biden had insisted on agreeing to the debt ceiling without conditions, saying the US always pays its bills and debt default is non-negotiable.
But faced with a June 1 deadline, when the Treasury Department says it will run out of money, Biden launched negotiations with Republicans.
Are you close to solving it?
There are positive indications, although there are stressful moments in the talks.
Start-and-stop negotiations got back on track late Sunday, and all sides appeared to be racing toward a deal. The negotiators left the Capitol building after 8 p.m. Sunday and said they would continue to work.
“I think we can solve some of these problems if he understands what we’re looking for,” McCarthy said after his call with Biden.
“We have to spend less money than we spent last year,” the spokesman added.
For his part, Biden said at a press conference in Japan before his departure: “I think we can reach an agreement.”
But reaching an agreement is only part of the challenge. Any agreement must pass the House and Senate with significant bipartisan support. Many expect that the acceptance of the White House and the leadership of the Republican Party will be enough to cross the finish line.
What are the outages?
Republicans want to reduce spending to 2022 levels and put an end to future spending over the next decade.
Democrats are not willing to go that far to cut federal spending. Instead, the White House has proposed keeping spending flat at current levels for 2023.
There are also policy priorities under consideration, including steps that could help speed up the construction and development of energy projects that both Republicans and some Democrats want.
Democrats fiercely opposed a Republican push for tougher enforcement Work requirements People who receive government assistance through food stamps, Medicare, and cash assistance programs.
However, Biden has kept the door open for some discussion about the business requirements.
What happens if they don’t raise the debt ceiling?
Default will be by the government Unprecedented and devastating to the nation’s economy. Yellen and economists said it could be “catastrophic”.
There’s really no blueprint for what’s going to happen. But that would be Far-reaching effects.
Yellen said it would destroy jobs and businesses and leave millions of families who depend on federal government payments “likely without pay,” including Social Security beneficiaries, veterans and military families.
Government officials estimate that more than 8 million people could lose their jobs. The economy could descend into recession.
“A default could cause widespread suffering as Americans lose the income they need to make a living,” she said. Disturbances in federal government operations may affect “air traffic control and law enforcement, border security and national defense, and food safety.”
Is there a backup plan if talks fail?
Some Democrats have suggested they could raise the debt ceiling on their own, without help from Republicans.
Progressives urged Biden to invoke a provision in the constitution Fourteenth Amendment which states that the validity of the public debt of the United States “shall not be questioned.” The argument therefore goes that the default is unconstitutional.
Supporters of the unilateral measure say Biden already has the authority to effectively cancel the debt limit if Congress does not raise it, so that the country’s debt health is not called into question. On Sunday, the president said it was “a question I think is not resolved” about whether he can act on his own, adding that he hopes to try to get the judiciary to consider the idea of the future.
Meanwhile, House Democratic Leader Hakeem Jeffries launched a process in Congress that would “discharge” the issue to the House floor and force a vote on raising the debt limit.
It’s a cumbersome legislative measure, but Jeffries has urged House Democrats to sign on to the measure in hopes of gathering the necessary majority to hold a vote.
The challenge for the Democrats is that they have only 213 members on their side – five short of the 218 required for a majority.
Getting five Republicans to cross over and join the effort won’t be easy. The minority’s “discharge” petition is seen as a major affront to the party leadership, particularly on such an important issue as the debt ceiling. Few, if any, Republicans might be willing to suffer the consequences.
