Congress is heading into a critical week in the debt limit battle, when a meeting between President Biden and top congressional leaders will set the tone for negotiations — or lack thereof.
There are few signs of the two sides reaching a deal any time soon. The Tuesday meeting will be a gauge of the odds of that happening in the few weeks left before a debt default deadline that could arrive as soon as June 1, threatening to upend a shaky economy.
The combination of factors — entrenched positions, partisan pressures and a swiftly ticking clock — has raised plenty of doubts that party leaders will be able to reach a deal in time.
“I’m sympathetic to the people who say that actually working things out this month in any substantive way just seems like a very tall order — that they’re not really leaving themselves much time on this calendar,” said Philip Wallach, senior fellow at the American Enterprise Institute.
“I’m inclined to think that there will have to be some kind of punt.”
For Republicans, getting Biden to finally agree to a meeting on the topic at all was a success, even if it is just a first step. Senate Republicans have thrown their full support behind Speaker Kevin McCarthy (R-Calif.) as he aims to extract an agreement from Biden to accept spending cuts and policy reforms in return for the GOP’s support for raising the debt ceiling.
But even as Republicans surprised Washington late last month by passing a debt limit increase and spending cut bill through the House, Democrats and the White House are standing firm in demanding a “clean” debt increase — though they have little leverage to achieve it.
The impasse has persisted for months, but the effort to break through it gained urgency last week when Treasury Secretary Janet Yellen warned the elusive date when the agency would exhaust its powers to pay all the government’s obligations could arrive as early as June 1.
The surprise announcement had one immediate effect, prompting Biden to call this week’s White House meeting. But it’s done nothing to move either side closer to the other; in fact, each party is now simply pointing to the imminent threat of default as the reason for the other to cave.
Republicans say the burden is now on Democrats and the Biden administration.
“The administration and, quite honestly, the Democrats in the Senate have fiddled. They’ve created the tight timeline,” Rep. Scott Perry (R-Pa.), chair of the conservative House Freedom Caucus, told The Hill. “It’s not like we’re going to negotiate with ourselves or backtrack from our current position, which we fought hard to come to.”
And while they do not expect their bill that pairs a $1.5 trillion debt increase with around $4.8 trillion in deficit reduction over a decade to be a final product, Republicans have refused to articulate which portions of their sweeping plan are nonnegotiable.
“The red line is that we’re not going to do a clean debt ceiling, period,” Rep. Garret Graves (R-La.), who led GOP negotiations in crafting the bill, told reporters last week.
Biden has been equally firm, saying he’s happy to meet with McCarthy but raising the debt ceiling is “not negotiable.”
What happens next is anyone’s guess, but the options can be counted on one hand.
The parties could come together to reach a deal to hike the government’s borrowing cap and prevent a default. They could agree to a temporary debt limit suspension that buys more time to negotiate a long-term compromise. Biden could attempt to lift the debt ceiling unilaterally, as the White House is reportedly discussing. Or a bipartisan group of House lawmakers could use a procedural tool to force a debt ceiling hike to the floor over the objections of McCarthy and most of his conservative-leaning conference.
A failure to succeed with any of those strategies would result in the first default in U.S. history — a scenario that finance experts of all stripes have warned would devastate the global economy.
House Democrats are moving on a backup discharge petition plan to force a vote on raising the debt ceiling. But that plan would need support from at least five Republicans — and their top candidates are resisting undermining their party to join that plan.
“This proposal is just a distraction from Biden’s failures to negotiate in good faith about the debt ceiling,” said Rep. David Valadao (R-Calif.), whose district broke for Biden in 2020.
The dispute is not about whether the parties should negotiate deficit-reduction strategies, but in what context those talks should occur.
Republicans maintain that raising the debt ceiling, because it’s been necessitated by deficit spending, is directly connected to the negotiations over future government outlays. Their debt-ceiling package combined those two issues, and passing it through the House has given them some leverage as a starting point in the talks with Biden.
“The American people have said that we want to lower inflation, lower the interest rates, return ourselves to energy security, and this bill does all of those,” said Rep. Kevin Hern (R-Okla.), head of the Republican Study Committee. “So we’ll have to see which one the Democrats don’t think is important anymore.”
Democrats disagree, emphasizing that hiking the debt limit does not authorize new spending, but merely empowers the Treasury to make good on obligations already approved by Congresses and presidents of both parties in years past. With that in mind, they’re insisting on divorcing the two debates and raising the debt ceiling — quickly, as a standalone bill — to assure jittery markets that no default is forthcoming.
Rep. Dean Phillips (D-Minn.), a vocal member of the centrist Problem Solvers Caucus, wants the sides to come together on a plan to rein in long-term deficit spending. But the debt ceiling debate, he quickly added, is the wrong place to do it.
“I respect my Republican colleagues, and I recognize they have no other tool or leverage available other than to employ this threat,” Phillips said. “But I think it’s a very dangerous threat.”
Heading into this week’s recess, Democrats and Republicans alike acknowledged a major factor — and perhaps the decisive one — will be who can win over the greater share of public approval, which both sides are racing to capture as June 1 rushes closer.
“I think most Americans — you go look at the polling — [there’s] overwhelming support for returning spending to pre-COVID levels,” said Rep. Chip Roy (R-Texas). “So we’re just going to go on offense, make that message clear, and they’ve got to do their job.”
Republicans are also pointing to a surprise victory they secured earlier in the year, when Biden signed a GOP bill to overturn a Washington, D.C., criminal sentencing law. The president had initially vowed to oppose the measure but reversed course after Congress sent it to his desk — a capitulation Republicans are hoping to see repeated in the debt ceiling fight.
“We’ve done it before; we’ll do it again,” said Rep. Dusty Johnson (R-S.D.), head of the GOP’s Main Street Caucus.
Mychael Schnell contributed.