Chris Lieberman, FISM News
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Top Republicans and Democrats are gearing up for a high-stakes showdown on Tuesday, with President Joe Biden set to meet with congressional leadership in the Oval Office to negotiate a deal to raise the federal debt limit as the deadline draws near.
Biden will be joined by Senate Majority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries on the Democratic side, while House Speaker Kevin McCarthy will lead negotiations for the Republicans alongside Senate Minority Leader Mitch McConnell. Both sides hope to hammer out a deal to prevent the U.S. from defaulting on its debt.
With Democrats controlling the White House and Senate and Republicans in charge in the House, any deal to raise the debt ceiling would have to appease members of both parties.
Treasury Secretary Janet Yellen says that without a debt limit increase, the federal government could run out of money as soon as June 1, though the exact date remains unclear.
The president is insisting on his position that the debt limit must be raised without any conditions. However, Republicans say they won’t agree to raise the limit without substantial cuts to federal spending.
Last month, Republicans in the House narrowly passed a bill that raised the debt limit by $1.5 trillion but would reduce federal spending by approximately $4.5 trillion over the next 10 years. The Republican bill also rolls back several of Biden’s climate measures and adds work requirements for welfare recipients.
“We’re the only ones to pass a plan. So, I think it’s up to you now. Whether the economy goes in any trouble, it’s you, because the Republicans raised the debt limit,” McCarthy said in a press conference following the bill’s passage.
DEMOCRATS CALL IT ‘DRACONIAN’
But Biden called the proposed spending cuts “Draconian,” arguing that spending cuts should not be tied to raising the debt limit. “The two are totally unrelated. Whether you pay the debt or not doesn’t have a damn thing to do with what your budget is.” Biden said on Friday. “They’re two separate issues, two.”
Tuesday’s negotiations are the first time in 96 days that Biden will meet face-to-face with McCarthy. However, with the two parties so far apart, it is unlikely that they will strike a deal today.
The U.S. actually hit the debt limit in January, which has forced the Treasury to take extraordinary measures to make sure the government meets its obligations. However, if the White House and Congress are unable to reach a deal soon, the U.S. will default on its debt for the first time in history.
A default could have disastrous consequences, likely plunging the economy into recession and leading to high unemployment. The government would also no longer be able to pay out programs such as Social Security and Medicare.
If Congress and the president do reach a deal before or shortly after the deadline — it seems they always do — prolonged negotiations could still have a negative impact on the economy, with pessimism on Wall Street causing stocks to plunge.
The last major standoff between Democrats and Republicans on raising the debt limit was in 2011. That time, the two parties eventually reached an agreement, but not before the country’s top-notch credit rating was downgraded and a major selloff in the stock market.
Americans are divided on whom they would blame if the debt limit isn’t raised. According to a new ABC News/Washington Post poll, 39% say that Republicans would be primarily at fault, while 36% said they would blame President Biden. An additional 16% said that both would be equally responsible.