The high-stakes game of debt-ceiling chicken between President Biden and Republicans is nearing a collision, and both sides are still daring the other to blink.
Treasury Secretary Janet Yellen announced Monday that the U.S. may not be able to pay its bills after June 1. A few hours later, Biden broke a months-long stalemate by inviting Speaker Kevin McCarthy (R-Calif.) and other congressional leaders to the White House.
Even so, the two sides have remained dug in and far apart.
Biden is demanding a “clean” debt ceiling increase without any spending cuts attached, while Republicans are pressing for deep cuts to Democratic priorities in their bill — and they could have less than a month to reach a compromise.
“There are likely two options left for McCarthy,” Senate Majority Leader Chuck Schumer (D-N.Y.) told reporters Tuesday. “Either Republicans cause a first-ever default on the national debt, or go for their awful bill.”
“There’s a better alternative,” Schumer continued. “We pass a bipartisan clean bill to protect the full faith and credit of the U.S.”
Last month, House Republicans passed a sweeping bill to raise the debt limit with a slew of partisan proposals attached, drawing swift opposition from Democrats. Even some Republicans have acknowledged the unlikeliness of such a bill becoming law.
Republicans say the proposed cuts, which estimates project could lead to trillions in savings over the next 10 years, are a necessary check on government spending as the national debt hovers around $31.4 trillion.
Democrats have signaled an openness to discussing a debt reduction bill that isn’t tied to raising the debt limit. But the two parties are deeply divided over how they would reduce the debt, as Democrats push to hike taxes on the wealthy and oppose GOP-backed cuts to social safety net programs.
Biden and McCarthy are set to meet next Tuesday as part of a larger meeting between the White House and the four top congressional leaders. The meeting will mark the first sit-down between Biden and McCarthy since February.
And while lawmakers say they expect more details about the path ahead after the meeting, they aren’t holding their breath for a deal anytime soon.
“If [Yellen] would have said June 15, we would have been done closer to June 15,” Sen. Mike Rounds (R-S.D.) said Tuesday.
“If she would have said July 1, it would have been done closer to July 1.”
In the weeks since the unveiling of the House GOP’s debt limit bill — dubbed the Limit, Save, Grow Act — Democrats have battered the plan. The bill caps government funding at fiscal 2022 levels and limits spending growth to 1 percent every year for the next decade.
Other proposals featured in the bill would impose tougher work requirements on programs like Medicaid and the Supplemental Nutrition Assistance Program (SNAP), put an end to popular student loan relief implemented under the Biden administration and cut parts of the Inflation Reduction Act, a signature economic bill passed by Democrats last year without GOP support.
“They want us to pass their ‘Default on America Act’ so they can cut essential government services that we all rely on,” Senate Appropriations Chairwoman Patty Murray (D-Wash.) said Tuesday, arguing the bill would “slash funding for our veterans, make our country less safe and surrender our economic competitiveness to China.”
Republicans have vehemently denied that the proposed budget caps would mean cuts for military and veterans benefits, though the legislation doesn’t include specific language protecting those areas from potential cuts.
Many Senate Republicans see the House-passed bill as a reasonable “starting point” for bipartisan negotiations around raising the debt limit.
“This is pretty clear,” Sen. John Kennedy (R-La.) said. “I mean, unless you peaked in high school, you can understand that we’re not running deficits because we tax too little. We’re running deficits because we spend too much.”
The White House is leaving room for the possibility of a short-term extension as a way to avoid a default. When pressed Tuesday on whether Biden would support such a move, press secretary Karine Jean-Pierre did not rule it out but declined to discuss specifics.
Lawmakers are facing a tight timeline to strike a debt limit deal, with many obstacles between a May 9 meeting and a potential June 1 deadline. Those include McCarthy’s ongoing trip in the Middle East and Biden’s scheduled trip to Asia later this month for the Group of Seven summit.
It is unclear if Congress plans to adjust its scheduled recess, an escape hatch members have thus far shown little interest in.
In remarks on Tuesday, Schumer — and many Republicans — pushed back on the idea of a short-term extension.
“You should not kick the can down the road,” Schumer said, while pressing for prioritization of a plan that would extend the debt limit for two years.
A two-year debt limit increase would span through next year’s presidential election, clearing a major political obstacle in Biden’s path to another term.
The House GOP proposal would either raise the debt ceiling by $1.5 trillion or through next March, whichever happens first.
The White House’s strategy to stand firm and not negotiate could spell trouble for vulnerable Republicans in 2024, argued Nu Wexler, former communications director for the House Budget Committee Democrats.
“The White House can afford to hold their ground because public opinion is on their side — 70 percent of Americans support raising the debt ceiling in order to avoid default. If that number holds, the 18 House Republicans in Biden districts will be under a lot of pressure to support a Democratic proposal,” he said, citing CBS polling from last month.
The White House on Tuesday wouldn’t say when the president decided to offer the May 9 meeting, but that it was after the administration analyzed a Republican-approved debt ceiling plan to raise the borrowing limit and implement sweeping spending cuts.
Biden does not support pairing the two and plans on having separate conversations involving budget negotiations with McCarthy and other leaders, but not in next week’s scheduled meeting, according to the White House.