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Biden Faces His First Big Choice on Debt Limit

WASHINGTON — This week’s vote by House Republicans, which combined agreement to sharply cut spending and raise the debt ceiling for a year, put President Biden in a defensive position and made a series of moves at a dangerous economic moment. Forced to face potentially painful choices.

Biden has long insisted he won’t negotiate spending cuts or other efforts to reduce the federal debt.

But business groups, fiscal hawks and some Democrats have called on Mr. Biden to start serious negotiations toward a deal that would avoid a default.

Biden and his aides now have to choose how to interact with California House Speaker Kevin McCarthy and majority leader Senator Chuck Schumer of the New York Democratic Party. Minority leader Senator Mitch McConnell of Kentucky. Rep. Hakeem Jeffries of New York, Minority Leader of the House of Representatives, and the Terms.

The president faces a cascading series of decisions as the country already hits the $31.4 trillion debt ceiling and the barrel is nearing default. He needs to find common ground on spending cuts with Republicans who don’t share his penchant for slashing the nation’s debt by raising taxes on businesses and the wealthy. He will have to decide if he is ready to sign the debt ceiling hike that comes with the terms demanded by House conservatives.

Ultimately, we may have to decide how aggressively to intervene in the sensitive politics of the House leadership. A potential debt-restriction pact was McCarthy’s most lulling, which laid the groundwork for the current brinkmanship policy when he held the power to oppose his promotion to the gall of the speaker and push him out. may spur rebellion by non-members.

They are all complicated choices, as government officials explain. Biden and his aides do not want to encourage Republicans to habitually threaten economic collapse under, and only under, Democratic presidents. They also recognize that a default-induced recession will hit American families in the same way that Mr. Biden is stepping up his re-election campaign.

Some of Biden’s next steps are clear. To the chagrin of some House conservatives, there was no scenario for the president to sign into law a bill that narrowly cleared Congress on Wednesday. In addition to raising limits, it included spending cuts, new support for oil and gas drilling, and the near-total repeal of a bill Biden signed aimed at fighting climate change.

After the vote, White House Press Secretary Carine Jean-Pierre said, “The president has made it clear that there is no chance of this bill becoming law.” Republicans in Congress must act unconditionally and immediately to avoid default.”

But that doesn’t mean Biden can maintain his current stance on McCarthy indefinitely. Administration officials have been pressuring business groups to pressure Republicans to pass an unconditional debt ceiling hike. But on Wednesday, major business lobby groups such as the U.S. Chamber of Commerce and the Business Roundtable applauded the passage of the bill in the House and called on Biden to get involved.

“Failure to raise the debt ceiling could provoke a strong market reaction and cause severe economic consequences,” said Joshua Bolten, president and CEO of the Business Roundtable. This could include widespread unemployment, declining retirement savings and severe hardships for millions of American families. We look forward to revitalized negotiations between Congress and the Biden administration on a bipartisan deal that will take default off the table and begin hard work to address the deficit and debt.”

White House officials have acknowledged that Mr. Biden will have to negotiate taxes, spending and debt with congressional leaders. In recent days, the president has suggested having a candid discussion with Republicans about financial matters, and Republicans nod that they have nothing to do with borrowing limits.

Biden told reporters at the White House on Wednesday, “I’m happy to see Mr. McCarthy, but I’m not talking about whether the debt ceiling will be extended.” “It’s non-negotiable.”

Biden still sees his position in fiscal talks and the public debate surrounding them as a political winner. Earlier this year, he demonized Republican plans, including cuts to safety-net programs, and forced Mr. McCarthy to shift Social Security and Medicare—his two biggest drivers of federal spending growth over the next few years—to the GOP. I forced it to get out of hand inside. Specification.

Most recently, officials across the administration condemned a Republican bill that could cut spending on programs popular with veterans, students and others. They can do that because the bill doesn’t specify where most of the spending cuts will come from, leaving that job to future Congressional budgeters.

In a White House memo obtained by The New York Times this week, officials outlined what they believe Republicans must cut to meet the law’s spending cap while keeping military spending intact. Over a decade of savings includes $500 billion in veterans’ healthcare, $300 billion in scientific and other research, and $100 billion in early childhood education program head start.

Some administration officials have made a central element of the agreement to continue funding the government and raise borrowing limits likely to form a more modest version of spending caps that would last only a few years at most. It informally suggests that there is. Some business groups agree, but want lawmakers to add a bipartisan effort to simplify government permits for fossil fuels, clean energy and other projects.

But many Republicans in the House appear unmoved from the bill, which passed by just one vote on Wednesday, and it will take Republican and Democrat votes to pass the House to narrow the spending cuts. It is likely that a combination of Conservatives have started to try to remove McCarthy as chairman.

South Carolina Rep. Ralph Norman and members of the Freedom Caucus emerged from a closed-door briefing on the bill ahead of Wednesday’s vote, demanding that Republicans refuse to accept anything less than the initial proposal. .

“I wanted twice as much as what was out there,” said Norman. “I agreed to vote for it because it would start the ball and lead us to an arena for settling our debt problems. I’m not interested.”

Katie Edmondson contributed to the report.

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