Daily Management Review

Meeting Between McCarthy And Biden Finishes Without A Debt Ceiling Agreement


Meeting Between McCarthy And Biden Finishes Without A Debt Ceiling Agreement
Despite having only 10 days before a potential default that might destroy the US economy, US President Joe Biden and House Speaker Kevin McCarthy promised to continue their discussions. The US government's $31.4 trillion debt ceiling must be raised.
The president of the United States, a Democrat, and the senior Republican in Congress have had trouble reaching an agreement because McCarthy is pressuring the White House to accept expenditure cutbacks in the federal budget that Biden deems "extreme," and because the president is attempting to enact new taxes that Republicans have refused.
However, following the discussion on Monday evening, both parties emphasised the necessity of avoiding default with a bipartisan agreement and indicated that they would be in contact frequently in the days to come.
White House negotiators were expected to return to Capitol Hill on Monday night to pick up where they left off, according to a person with knowledge of the matter.
"We reiterated once again that default is off the table and the only way to move forward is in good faith toward a bipartisan agreement," Biden said in a statement after the meeting, which he called "productive."
After more than an hour of discussions with Biden, McCarthy assured reporters that the two sides would "get together, work through the night" to try to reach an agreement.
"I believe we can still get there," McCarthy said. He is not willing to consider Biden's plan to cut the deficit by raising taxes on the wealthy and closing tax loopholes for the oil and pharmaceutical industries, he said, and is focused on reducing spending in the 2024 federal budget.
Democrats and Republicans must raise the government's self-borrowing cap by June 1 to avoid a historic debt default that, according to analysts, may lead to a recession.
The earliest estimated default date is still June 1, according to Treasury Secretary Janet Yellen, who also stated that it is "highly likely" that Treasury won't be able to pay all government obligations by early June if the debt ceiling is not raised.
Any partial budget agreement to lift the debt ceiling was rejected by Republican Representative Patrick McHenry, who was present at the White House meeting. No one will consent to anything until we have a completed agreement, he said.
He claimed that the tone at the meeting with Biden was the most upbeat thus far.
Any agreement to raise the cap depends on support from both parties in Congress since it must be approved by both chambers. While Biden's Democrats govern the Senate 51-49, McCarthy's Republicans command the House 222-213.
Failure to raise the debt ceiling would result in a default, which would roil the financial system and raise interest rates on everything from credit card balances to auto loans.
As investors awaited information on the negotiations, U.S. markets increased on Monday.
If and when Biden and McCarthy reach a deal, it will take several days for legislation to be passed through Congress. According to McCarthy, an agreement must be reached this week in order for it to be approved by Congress and become law before the country defaults.
In exchange for raising the debt ceiling, which is required to pay for previously approved spending and tax cuts by lawmakers, Republicans want to reduce discretionary spending, add work requirements to some programmes for low-income Americans, and claw back COVID-19 aid.
Republicans want to return to 2022 levels the following year and limit spending growth in the following years, while Democrats want to maintain spending at this year's levels in 2024.
A measure approved by the House last month would slash 8% of government spending across the board in 2019.
Republicans' "Limit, Save, Grow" Act and Democratic President Biden's proposed budget for 2024 will both result in budget savings over a ten-year period, but they will do so in very different ways.
Republicans' "Limit, Save, Grow" Act and Democratic President Biden's proposed budget for 2024 will both result in budget savings over a ten-year period, but they will do so in very different ways.
Biden, who is running for re-election and has made the economy a key component of his domestic agenda, has said he would contemplate spending cutbacks in addition to tax modifications but that Republicans' most recent offer was "unacceptable."
Trump tweeted that he wouldn't support "Big Oil" subsidies and "wealthy tax cheats" while putting millions of Americans' access to healthcare and food aid at danger.
Any concessions must also be weighed against pressure from hardline parties' factions on both sides.
Some members of the extreme right-wing House Freedom Caucus have called for an end to negotiations and demanded that the Senate ratify their House-passed legislation, which Democrats have rejected.
McCarthy, who made significant concessions to right-wing extremists to gain the speakership, may run the risk of losing his job if his own party does not approve of the deal he strikes.
Republicans should impose a default if they cannot accomplish all of their objectives, according to former president Donald Trump, a Republican who is running for re-election after losing to Biden in the 2020 election while downplaying any negative economic repercussions.
Any measures that would hurt families and lower-income Americans have been resisted by liberal Democrats. The top Democrat in the House, Hakeem Jeffries, charged that Republicans were holding the negotiations in "hostage negotiation" and stated that he is looking for Republican support for a discharge petition that may increase the debt ceiling on its own.
According to Jeffries, Biden offered to freeze spending at this year's levels, but Republicans rejected his proposal.