After months of insisting that the White House would not negotiate the debt-ceiling limit, President Joe Biden sat down with House Speaker Kevin McCarthy to discuss Republican lawmakers’ demands.
Key Details
- After hitting the debt ceiling earlier than expected this year, Republican lawmakers have insisted that the debt limit should not be raised unless certain spending cuts are enacted.
- Democrats and the Biden administration have insisted that the ceiling should be raised without concessions.
- After President Biden and McCarthy’s talks yesterday, the House Speaker says that the U.S. will not default on its debt, and the conversation is moving forward.
Why it’s news
Legislators have just two weeks before the Treasury Department says the U.S. government will run out of money. In the months since Treasury Secretary Janet Yellen announced that the debt limit had been reached, there has been no progress in negotiations until now.
Democrats have focused on the fact that if we do not raise the limit, government operations will be affected, therefore, politics should not play a role in the discussions. Republicans, meanwhile, say that the negotiations should involve details about why we need to raise the debt ceiling in the first place—excessive government spending—otherwise this will never end.
After the first meeting Tuesday night, McCarthy says he is encouraged by President Biden’s willingness to negotiate, and he does not think that the U.S. will default on its debt. However, the Speaker did not say he felt optimistic about the discussions, CNBC reports.
“The only thing I’m confident about is now we have a structure to find a way to come to a conclusion,” McCarthy says. “The timeline is very right. But we’re going to make sure we’re in the room and get this done.”
If the lawmakers cannot agree by June 1, the government will not be able to cover the expenses it committed to in the last budget agreement. House Republicans are holding firm on their resolve not to raise the debt limit without including spending cuts.
While both McCarthy and House Minority Leader Hakeem Jeffries said that the negotiations were progressing, they also noted that both sides held firm positions.
“It was a very positive meeting yesterday,” Jeffries says. “It was calm. It was candid in terms of the discussion, and I’m optimistic common ground will be found in the next week or two.”
One of the hang-ups in discussions has been the Republican request to attach work requirements to government food benefits. Jeffries remains staunchly against this change and pointed out that McCarthy voted against a similar proposition in 2018, CNBC reports.
McCarthy, however, says that adding work requirements to government benefits is the “responsible” approach. He also pointed out that President Biden voted in favor of similar legislation during his time as a senator.
“Work requirements only go to those able-bodied people with no dependents,” McCarthy says. “You could be in school and be waived. You could be looking for a job and be waived. But what we’ve found is with every statistical data is that it helps people get a job, it helps our supply chain, it helps the economy and the individual even stronger, and that’s what we should be doing.”
If negotiations fail and the U.S. defaults on its loans, the gross domestic product will drop an estimated 4%, and around 7 million workers may lose their jobs, according to a recent Moody’s Analytics report.