President Joe Biden is scheduled to meet with Congressional leaders Tuesday as the U.S. prepares to reach its debt limit next month.
With a divided Congress, it’s not exactly clear how the two sides will settle their differences. Republicans are demanding spending cuts to coincide with raising the debt ceiling. Democrats are wanting a clean bill to preserve domestic programs.
The Treasury says the U.S. debt limit is “the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments.”
There is broad agreement among lawmakers that exceeding the debt limit would have dire consequences for the U.S. economy. Treasury Secretary Janet Yellen warned that even waiting to the minute would cause problems. By her estimation, the U.S. will exceed its debt limit on June 1.
“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States,” Yellen told Congress last week. “If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests.”
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White House press secretary Karine Jean-Pierre said the president’s message to Congress will be: “Do your job.”
“The President — we've been very clear, and he's going to make it clear, it's Congress' constitutional duty to act, to prevent default,” she said. “That's what the president is going to be very clear about. And that's what we hope.”
“This is spending that has already occurred,” Jean-Pierre added. “They need to do the right thing that has been done 78 times since 1960. It's that simple. It is very, very simple. It is the right thing to do. It is their constitutional duty. It is not complicated at all.”
House Speaker Kevin McCarthy says House Republicans have done their job. He said it is now up to Senate Democrats and President Biden to act.
Late last month, the Republican-led House passed a bill that would extend the debt ceiling to March 31, 2024, and cut spending.
For instance, the bill includes cuts to Medicaid, which the Congressional Budget Office estimateswould increase the number of uninsured Americans by 600,000. It would also change the administration’s rule on income-driven student loan repayments, raising monthly payments for many borrowers. It would increase the number of Americans required to work in order to receive Supplemental Nutrition Assistance Program food benefits. The spending cuts would also reduce clean energy tax credits.
“House Republicans just delivered a plan that will address the country’s debt crisis. Our conference came together to pass the only plan in Washington that will tackle the debt ceiling, stop excessive federal spending and inflation, and put our country back on track for sustained economic growth,” McCarthy said.
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