Chris Lange, FISM News
The clock is ticking on a looming U.S. debt default with little progress reported in talks to raise the debt ceiling. Democratic and Republican congressional leaders appeared on Friday to be no closer to reaching a deal to maintain the nation’s solvency and keep the federal government running. GOP demands for spending cuts remain the key sticking point in negotiations that only began in earnest last week.
A Congressional Budget Office report released on Friday projected a federal budget deficit of $1.5 trillion for 2023 — a figure representing $0.1 trillion more than it estimated in February.
The nonpartisan agency said that the federal government is at “significant risk” of being unable to pay its bills in the coming weeks without increasing the debt ceiling. Moreover, while Treasury Secretary Janet Yellen said that a debt default could occur as early as June 1, the CBO warned that spending for the remainder of May remains “uncertain.”
“If the debt limit is not raised or suspended before the Treasury’s cash and extraordinary measures are exhausted, the government will have to delay making payments for some activities, default on its debt obligations, or both,” the report said, accompanied by a warning that such actions “could result in distress in credit markets, disruptions in economic activity, and rapid increases in borrowing rates for the Treasury.”
The agency further projected that U.S. annual deficits will soar to $2.7 trillion over the next 10 years if existing tax laws and spending remain unchanged.
At the conclusion of 2033, “debt measured as a share of GDP would reach the highest level ever recorded in the United States and would be on track to rise even further” barring changes, the report continued.
At week’s end, President Biden and Democratic leadership appeared unwilling to budge in their opposition to spending cuts outlined in a Republican debt ceiling bill that passed in the House earlier this month. The vote that followed months of internal GOP debate took Democrats by surprise. It also forced Biden to finally accept a long-standing offer from Republicans to meet for talks on the subject.
The House bill would cut spending by nearly $5 trillion and raise the debt limit by about $1.5 trillion or until March 31, 2024, whichever comes first.
TALKS TO RESUME THIS WEEK WITH PARTIES REMAINING AT IMPASSE
Comments made by both President Joe Biden and House Speaker Kevin McCarthy (R-Calif.) on Friday underscored both parties’ unwillingness to concede any point.
McCarthy said on Friday that “the only responsible way to raise the debt ceiling is to limit reckless spending and get inflation under control.”
Meanwhile, Biden blamed the impasse on “MAGA Republicans.”
“MAGA House Republicans are threatening to default on America’s debts unless we give in to their demands,” Biden wrote in a Twitter post. “Their wish list could cut thousands of jobs – including wildland firefighters, National Park rangers, and workers who regulate water quality. It doesn’t work for families.”
By Sunday, however, the president had adopted a more conciliatory tone, saying that he remained optimistic that talks would progress.
“I really think there is a desire on [Republicans’] part as well as ours to reach an agreement. And I think we’ll be able to do it,” he told reporters.
The president has signaled a willingness to apply unspent COVID-19 relief funds to any agreement outlined in the Republican bill. Both sides also expressed interest in a proposal from Democratic West Virginia Gov. Joe Manchin to fast-track permitting for large investment projects.
Biden, however, remained firm in his objections to repealing clean energy tax credits included in the Inflation Reduction Act or ditching his student debt relief program now lingering on life support as the Supreme Court mulls two legal challenges.
DEMS PUSH BIDEN TO USE 14TH AMENDMENT TO BYPASS GOP CONSENT
The president and his party are demanding an agreement from Republicans to immediately raise the debt ceiling without spending cuts, saying that the latter should be discussed separately.
Some Democrats have continued pushing Biden to take the unprecedented step of invoking the 14th amendment to bypass required Republican consent to a debt ceiling hike. The president told reporters on Tuesday that he was “considering” such action, despite a warning from Treasury Secretary Janet Yellen that it would be problematic.
“There would clearly be litigation around that; it’s not a short-run solution,” she said at a news conference in Japan, adding it would be “legally questionable.”
“I personally feel that we should test that and I think that the language is very explicit in that amendment,” said Senate Judiciary Committee Chairman Dick Durbin (Ill.) when asked whether Biden has the authority to take such action, The Hill reported.
The language to which Durbin referred states that “the validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”
With no deal yet in sight, President Biden on Monday kicked off an eight-day tour of the Indo-Pacific. He and congressional leaders are scheduled to speak by phone again on Tuesday following Monday meetings between their respective staff members to discuss possible solutions.
This article was partially informed by The Center Square and Financial Times reports.