President Joe Biden, Top Lawmakers to Discuss Debt Limit on May 9 at the White House

On Monday, President Joe Biden sought to appease growing concerns over a possible default on the U.S. debt limit by inviting four Congressional leaders to the White House on May 9. The move signals growing fears of a default as the federal government might be unable to pay its bills as soon as June 1. 

Congressional and administration officials confirmed the meeting date and individual calls to lawmakers, insisting on anonymity to discuss the plans. GOP Senate Minority Leader Mitch McConnell of Kentucky said he spoke with the president and expected to speak with him again, although he did not confirm if he will attend the meeting. 

President Biden plans to stress that Congress must take action to avoid a debt default without any conditions and will talk about the urgency of preventing a default. He is expected to discuss beginning a separate process for passing a fiscal 2024 budget. However, even if a meeting occurs, there is no guarantee of progress on an issue that has furthered the divide between how Republicans and Democrats think the country should be governed. 

Speaker of the House, Republican Kevin McCarthy of California, and President Biden are at a standstill on lifting the government’s borrowing authority. The president has called for a straightforward increase to the $31.4 trillion cap. In comparison, McCarthy and GOP lawmakers demanded spending cuts in return and passed a $4.8 trillion bill in deficit savings over ten years last week. 

The speaker has called on the president to engage in talks. As recently as shortly after noon Monday, the president said in a speech that the Republican congressional leader must first commit that the American government would not default. 

Last week, House GOP members passed a bill that would reduce discretionary spending over the next decade in return for increasing the debt limit to $1.5 trillion or until March 31, 2024, whichever comes first, possibly setting up yet another showdown heading into the 2024 presidential election. 

The deadlock started to break down Monday afternoon following Treasury Secretary Janel Yellen’s warning in a letter that “we will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1, if Congress does not raise or suspend the debt limit before that time.”

Economists have been sounding the alarm about a potential financial catastrophe if the government of the world’s largest economy cannot pay its bills. A debt default could plunge the United States and other nations into a severe recession while damaging America’s financial credibility in ways that could make a full economic recovery extremely difficult. 

Speaker McCarthy: “The clock is ticking”

Speaker McCarthy did not reference any outreach by the president but insisted on Monday after the update by the Treasury that “the clock is ticking.”

“House Republicans did their job and passed a responsible bill that raises the debt ceiling, avoids default, and tackles reckless spending,” said McCarthy in a statement. “The Senate and the President need to get to work — and soon.”

It remains unclear how Congress and the president can resolve the matter; however, Democratic leaders want to separate the budget process from the debt limit.

Democrat House Minority Leader Hakeem Jeffries and Senate Majority Leader Chuck Schumer, both of New York, seized on Yellen’s letter as an impetus to settle differences over spending and address the debt cap “as part of our annual budget process, which is currently underway.”

“It’s time to put aside partisan interests and do what is right and necessary for the American people to avoid a first-ever U.S. government default that crashes the stock market, raises costs on families, and jeopardizes retirement savings,” said the lawmakers in a statement.

In a speech at the White House celebrating small businesses before the Yellen letter, President Biden painted the House GOP plan as an attempt to extort spending cuts from the administration, putting the federal government at risk of default. He portrayed some backers of the bill as loyal to the MAGA movement begun by former President Donald Trump and unreasonable extremists. 

“We pay our bills, and we should do so without reckless hostage-taking from some of the MAGA Republicans in Congress,” said Biden. 

For their part, Republicans insist veterans’ accounts and defense will be spared, although the bill doesn’t explicitly spell out the actual reductions. Mike Bost, Veterans Affairs Committee Chairman, R-Ill., said he was “very, very frustrated” with the suggestion of the Biden administration that services would be cut. “No veteran will lose benefits,” promised Bost on a weekend conference call.