Following the White House's declaration that it will not engage in negotiations to raise the country's debt ceiling, President Joe Biden, the Republicans, and the US economy were on a disastrous collision course Tuesday.
If there is no approval for further borrowing, Treasury Secretary Janet Yellen warns that the government would run out of money and begin to default on its bills as early as June 1.
That would entail being unable to pay for everything, including social programs, the military, and the national debt, dealing a catastrophic blow to the world financial markets.
On May 9, the following week, Biden will meet with Congressional leaders.
Republicans, who are in charge of the House, say that they will only raise the debt ceiling once Biden consents to significant spending cutbacks. The White House warns against doing it.
Press Secretary Karine Jean-Pierre said, “This is not an issue that we will compromise on.
Biden, according to Jean-Pierre, was open to talking about “a separate process to address the budget cuts,” but he insisted that the debt limit problem should be completely left aside.
According to the Constitution, Congress must avert default, she argued. The only realistic way to prevent default, given the short amount of time Congress has left, is for Congress to suspend the debt ceiling without restrictions.
The political will test, which is sometimes compared to playing chicken with an approaching train, occurs soon after Biden declared his intention to run for re-election in 2024.
Failure would thrust the election into perilous new area for the 80-year-old, who is resting his candidacy on a track record of reviving the economy after the Covid-19 outbreak. Failure would also cause a default and probable economic upheaval.
'WHAT HAS CHANGED?' –
Debt limit increases are often a routine yearly accounting technique that let the government pay for additional costs that had previously been spent.
Republicans, whose party is now controlled by a hard-right group in the House, have instead decided to use the matter as leverage in their larger effort to cut government spending and lower the deficit.
This is precisely what was outlined in a package approved by House Republicans, which combined raising the debt limit with significant expenditure cutbacks for a number of federal agencies.
The Democratic-led Senate has almost little prospect of approving the measure, and Biden would veto it in any event. According to Jean-Pierre, Biden considers the Republican budget cutbacks to be “unreasonable” and “dangerous.”
Jean-Pierre reiterated that it is completely up to Congress to prevent a default when pressed repeatedly on whether Biden would ultimately have to give in to Republican demands.
She said, “Congress has a responsibility to resolve this.” They should answer that.
When Donald Trump was president before Joe Biden, Republicans in Congress supported three yearly debt ceiling increases with minimal resistance, Jean-Pierre pointed out.
She said, “What has changed?”
