Biden and McCarthy: The Debt Ceiling Conundrum
After holding a phone discussion on Sunday while the president was flying back to Washington, which both sides hailed as being positive, the US President and Republican House Speaker Kevin McCarthy will be meeting on Monday to discuss the debt limit in greater detail. This comes after the two leaders conducted a phone chat on Sunday while the president was flying back to Washington.
McCarthy made the announcement after he finished a discussion with the president on Sunday, during which he sounded more optimistic than he has in the past about the possibilities for a settlement. The meeting, which will be McCarthy’s third with Mr. Biden this month, is slated to take place after the president returns from the Group of 7 meetings in Hiroshima, Japan.
McCarthy responded with the following when he was asked whether he had a more positive outlook after speaking with the president: “Our teams are talking today, and we’re setting up a meeting for tomorrow.” That is an improvement over how it was previously. So, yeah.”
It is important to keep in mind that time is running out for the discussions since the debt ceiling, which is the statutory limit on the government’s authority to borrow money to meet its commitments, is forecast to be hit as soon as June 1.
Negotiations are now taking place between Mr. Biden and Mr. McCarthy over a budget package that would lift the cap. Republicans have been adamant that this cannot be done without first reducing expenditures. They have not been able to come to an agreement on significant matters, including spending limits for the federal government, new work requirements for some users of federal anti-poverty aid, and financing that is intended to assist the Internal Revenue Service in its fight against tax evasion by high incomes and companies.
During a press conference in Hiroshima, Vice President Biden said, “I think we have the authority.” He went on to explain that the issue is whether or not it is possible to complete the task and exercise authority in time.
14th Amendment: The Savior?
Invoking section 4 of the 14th amendment, which states that “the validity of America’s public debt… shall not be questioned,” is one strategy that is believed to be a plausible alternative by a number of academics. Because of this phrase, the debt cap will be declared unconstitutional, and the problem will thereafter be remedied. This provision originated from the worry that a member of Congress from a southern state may refuse to repay debts accumulated during the Civil War as a result of waging war against the Confederacy. If all public obligations have been paid off, then it is illogical to place an artificial ceiling on the amount that the federal government owes. It has been argued by certain constitutional law experts that the restriction is constitutional. Others, on the other hand, argue that the phrase mandates that the government must continue issuing additional debt in order to pay bondholders, which would be a violation of the nation’s statutory borrowing limit, which is set by Congress and is subject to their authority.
The Current Predicament
During the discussions that took place the week before last, the two groups reached an agreement on a number of points, one of which was to recoup some unused monies from previously authorized Covid relief legislation. They have also come to an agreement in general terms on some kind of limit that will be placed on discretionary government spending for at least the next two years. However, they are unable to come to an agreement regarding the specifics of these caps, including how much they will spend overall during the next fiscal year.
In addition, Republicans want to cut money for the Internal Revenue Service’s enforcement division, a move that the Congressional Budget Office predicts will make the budget deficit worse by lowering the amount of revenue collected by the federal government in the future.
Ms. Yellen said that she was “greatly concerned” about Republican plans to decrease funding for the Internal Revenue Services. She went on to say that “we are all concerned about deficits and fiscal responsibility,” but that “deficits can be addressed both through changes in spending and through changes in revenue,” she added.