About two hours after a fruitless meeting this week between President Biden and senior Republicans over raising the federal debt ceiling, Biden finally announced that the government would avoid a catastrophic default. I gave a hint on how to do it.
In fact, it was two hints that were included in an impromptu press conference in the Roosevelt Room. For the first time, Mr. Biden has hinted that he is ready to reclaim unused stimulus money that was included in the economic relief bill he signed in 2021 during the pandemic. This suggests that this could be a starting point for a compromise between the president and Republican lawmakers, who have refused to raise the nation’s borrowing limit without sharply cutting spending. , has been pushing to withdraw some of its stimulus measures.
Republicans estimate that these clawbacks could save the government $50 billion to $70 billion. That’s a relatively small amount in the context of a $4.8 trillion proposal to cut spending and scrap clean energy tax cuts in exchange for raising the debt ceiling. did not deny it.
Biden said he “doesn’t need all” of the coronavirus-related unused funds. “But the question is what was the obligation there, was the promise made, was the money not paid, etc.? I have to see, take a good look at it. It’s on the table.”
The second clue wasn’t about potential compromise, but rather the opposite.The president admitted that he was considering what could be done in effect constitutional challenge To the very existence of the debt limit. Biden’s acknowledgment is a one-sided path that could face legal hurdles. But his comments suggest that if Congress fails to find a deal to raise the debt ceiling on terms acceptable to Mr. Biden, and before the country runs out of cash to pay the bill, the president will demand his default. I was suggesting that I might be ready to try to avoid… my own.
“I am considering the 14th Amendment,” Biden said, referring to a constitutional provision that states that “the validity of public debt” issued by the U.S. government is “not in question.” Some constitutional scholars say the clause requires the government to continue issuing new debt to pay bondholders, effectively overriding the country’s statutory borrowing limits, which are controlled by Congress. claims that
Still, Mr. Biden said, “The problem is that we have to sue.”
Neither route is close to a safe bet to avoid what Wall Street and White House economists say. We estimate that we may exhaust our ability to pay all bills on time, including on June 1st.
But the combination of these options could form the basis for Biden to tell reporters, “I’m absolutely certain,” that the threat of default could go away in time. I have.
Republicans have previously forced a debt limit showdown under Biden and former President Barack Obama. But current and former government officials, Washington’s business lobbyists and even progressive economists say the stalemate is different and could put the country at significantly higher risk of defaulting on its debts. .
House Speaker Kevin McCarthy has a small majority in the House. This includes a large group of spendthrift hawks who have pushed the debate over the debt ceiling. They said the House passed a bill to raise the debt ceiling to $31.4 trillion late last month, tying spending cuts, a rollback of the president’s climate agenda and a requirement for new jobs to receive government aid. claimed.
As Vice President in 2011, Mr. Biden negotiated a last-minute deal to raise limits and avoid a default. But as president, he said he would not negotiate Congress’ fundamental responsibility to allow the government to continue borrowing money to pay its bills. .
These dynamics could make it much harder for a country to escape default than it was in 2011. Coming out of Tuesday’s White House meeting, McCarthy immediately sought to denounce the threat of non-compliance by Biden and Senate Democrats.
“I did everything I could,” he said, to avoid the default. “We passed a bill to raise the debt ceiling. Now I haven’t seen it in the Senate. So I don’t know.”
Mike Konzal, director of the liberal Roosevelt Institute, said this week he fears investors and others will conclude from history that “solutions will emerge at the last minute.” .
“It seems much less likely now,” he said.
Still, corporate groups and some current and former government officials have publicly and privately outlined what they believe to be possible compromises to avoid a default. It will most likely center on an agreement to cap federal discretionary spending for at least two years. Other areas of mutual interest between Biden and Republicans may also be included, such as streamlining the development permitting process for wind, oil, gas, solar and other energy projects.
Democrats and Republicans say a stock market crash could boost such deals as a potential default looms and investors panic.
The Appropriations Compromise is simple enough for Congressional staff to draft in a few hours. Biden and Majority Leader Senator Chuck Schumer of New York said Tuesday that staff from both parties will meet for two days to discuss spending issues. “We have to think hard,” Mr. Schumer told reporters on Tuesday. “But getting default off the table would be the best thing to do right now.”
But it was unclear whether Biden’s insistence on not negotiating over the debt ceiling and emergency fiscal talks could coexist until he announced he was willing to recoup some of the coronavirus spending. Now, it seems likely that Biden and his team are willing to discuss the Republican spending proposals on a quick timeline, call them negotiations or not.
Biden may also be willing to act spontaneously by invoking the 14th Amendment and continuing to borrow to pay government bills if these arguments do not bear fruit. “I don’t think that will solve our problems,” he said.
But Biden said the move was under consideration anyway, emphasizing the idea at the end of his remarks about a possible default. “I will do my best to avoid it,” he said.
Katie Edmondson contributed to the report.