
Biden and McCarthy Reach a U.S. Debt Ceiling Deal
Should Congress abolish the debt ceiling?
Updated May 30, 2023
- President Biden and Speaker McCarthy struck a deal for the U.S. debt ceiling. McCarthy released a 99-page long legislative text finalized over weekend negotiations to be voted on by House lawmakers.
- Both Biden and McCarthy said the bill includes necessary trade-offs. Biden told reporters on Sunday:
"The agreement prevents the worst possible crisis: a default for the first time in our nation's history, an economic recession, retirement accounts devastated, millions of jobs lost."
- McCarthy said the bill is not 100% what both sides are asking for but praised the framework for being able to gain bipartisan support.
- Set spending caps for the federal budget in 2024 and 2025, with appropriation targets for the following four years;
- Raise the age of food stamp recipients subject to work from 50 to 54, but only until 2030;
- Create new exemptions that waive work requirements for young adults aging out of foster care, all veterans, and the houseless, only until 2030;
- Place restrictions on how often states can waive work requirements for food stamp recipients;
- Reduce the timeline for when environmental impact statements must be released for proposed projects and reform the way federal agencies conduct environmental impact statements;
- Decreasing funding for the IRS;
- And end the current pause on student loan repayments and interest accrual 60 days after June 30.
Updated May 23, 2023
- Biden and McCarthy met last night at the White House to continue discussing the debt limit. While it ended with no deal, the two expressed optimism that they would come to an agreement to avoid default.
- The Biden administration and House Republicans continue to double down on their own conditions. However, last week, Biden suggested there was a possibility he would consider McCarthy's proposal of requiring able-bodied adults without dependents enrolled in federal safety net programs, such as food stamps, to work. Progressive Democrats are concerned about Biden's suggestion.
- Both parties have also signaled a potential agreement regarding the $60 million in unspent COVID relief funds.
Updated May 22, 2023
- With just 10 days left to take action before the potential debt default, President Biden and House Speaker Kevin McCarthy are meeting this evening to discuss their plan. Both have acknowledged the main sticking point that needs to be addressed — mandatory spending caps.
- Little progress has been made on the government spending level negotiations between the White House and McCarthy's representatives. On Monday morning, McCarthy said to reporters:
"The underlying issue here is that Democrats, since they took the majority, have been addicted to spending. And that's going to stop. We're going to spend less than we spent last year."
- Biden said Sunday that across-the-board cuts "make absolutely no sense at all."
- Treasury Secretary Janet Yellen has maintained that June 1 is the government's "hard deadline" to raise the debt limit, or the U.S. will face the consequences of the nation's first-ever default.
Updated May 3, 2023
- Democrats responded to the news that the U.S.'s debt could default as early as June 1 by attempting to start the process to force a debt-limit increase bill to the floor through a discharge petition that could bypass Republican lawmakers.
- The Democrats introduced an emergency rule on Tuesday during a pro forma session held while the House was in recess. The move would allow them to start collecting signatures as soon as May 16. At least five Republicans would need to cross party lines to force the bill to the floor.
- President Joe Biden, Senate Majority Leader Chuck Schumer, and House Democratic Leader Hakeem Jeffries have taken steps to pave the way for an 11th-hour deal with Republicans. Biden is meeting with House Speaker Kevin McCarthy, signaling significant changes after months of not budging.
- As Biden and Republicans are in a standoff over the nation's debt limit, the Federal Reserve has decided to continue raising interest rates by a quarter-point to fight rapid inflation, a move that will weigh on the U.S. economy.
Updated April 26, 2023
- House Republicans are pushing forward their legislation to raise the debt ceiling, cut spending, and undo President Biden's various plans for the U.S.
- The GOP is rallying support around their proposal after leaders made a series of last-minute changes to the legislation designed to win over key Republicans — a major move after lawmakers insisted they would not make edits to the bill.
- Speaker Kevin McCarthy walked members through some of the changes during a closed-door meeting on Wednesday morning, leading to a few dissenting members beginning to fall in line. Now, GOP leaders are confident that their bill will pass later in the day. Zero Democrats are expected to support the legislation, and McCarthy can only afford to lose four votes in order for it to pass.
- If McCarthy can unite his side of the aisle and get his bill through the chamber, it will be a huge win for the GOP. The speaker's supporters say passing the bill is crucial to strengthen the Republican's argument in their negotiations with Biden and the Democrats.
Updated April 20, 2023
- House Speaker Kevin McCarthy released a legislative framework to raise the nation's debt limit for one year while decreasing federal spending.
- His proposal, the Limit, Save, Grow Act of 2023, would increase the debt limit by $1.5 trillion or raise the ceiling until March 31, 2024 — whichever came first. Additionally, it would limit discretionary spending, retrieve unspent pandemic-related funds, eliminate Biden's student forgiveness plan, and cut funds earmarked for the Internal Revenue Service.
- On the House floor Wednesday afternoon, McCarthy said:
"Limited government spending will reduce inflation and restore fiscal discipline in Washington. If Washington wants to spend more, it will have to come together and find savings elsewhere — just like every single household in America."
- McCarthy is expected to bring the proposal to the floor next week, echoing his confidence that the GOP will support the legislation. He noted that the cuts would not impact Medicare and Social Security, but his framework will include work requirements for adults without dependents who are enrolled in federal assistance programs.
- Democrats remain critical of debt ceiling negotiations that impact work requirements for people on those programs. Rep. David Scott (D-GA) said:
"Let me be perfectly clear: Holding food assistance hostage for those who depend on it — including 15.3 million of our children, 5.8 million of our seniors and 1.2 million of our veterans — in exchange for increasing the debt limit is a nonstarter...Speaker McCarthy and his extreme Republican colleagues are ensuring their failure."
Updated April 19, 2023
- The tension between President Biden and Speaker Kevin McCarthy (R-CA) over the national debt escalated this week. Both sides are holding their ground, neither indicating a will to budge nor when negotiations will resume.
- McCarthy turned to Wall Street on Monday to pitch his plan for the debt ceiling, which the White House and Democrats almost immediately disapproved of. At the New York Stock Exchange, the Speaker said the House Republican Conference would move forward with its own measures "in the coming weeks" to avoid default. Biden, on the other hand, still wants a clean debt ceiling increase for this year.
- White House spokesperson Andrew Bates said:
"Speaker McCarthy is breaking with the bipartisan norm he followed under [former President] Trump by engaging in dangerous economic hostage taking that threatens hard-working Americans' jobs and retirement savings. A speech isn't a plan but it did showcase House Republicans' priorities."
- Senate Minority Leader Mitch McConnell (R-KY) said:
"President Biden does not get to stick his fingers in his ears and refuse to listen, talk or negotiate. And the American people know that. The White House needs to stop wasting time and start negotiating with the Speaker of the House."
Updated March 9, 2023
- President Biden revealed the third budget plan of his presidency today, which the White House says reflects the administration's commitment to building a fair economy. The $6.8 trillion plan will increase spending on the military and new social programs while reducing future budget deficits.
- The White House says Biden's plan would decrease the deficit by $3 trillion over the next decade, primarily due to increased taxes on corporations and the rich. However, critics point to the government's projected spending, which would be $1.8 trillion more than the government would receive in 2024.
- The Republican-controlled House is not expected to pass the budget. Still, it will lead to a significant debate over the trajectory of the nation's debt limit, especially since the GOP is focusing on spending cuts.
- Biden's proposed budget would also increase funding for Medicare, Obamacare, Medicaid, the EPA, affordable housing, free preschool, reinstatement of the Child Tax Credit, Pell grants, student benefits, and more.
- To successfully implement the increases, Biden's plan proposes a minimum tax on billionaires of 25%, a 28% tax rate on corporations, a cut in tax breaks for oil and gas companies for real estate investors, increasing tax on stock buybacks, ending tax breaks used by cryptocurrency transactions, and more.
- During his formal release of the plan in a speech in Philadelphia, Biden said:
"I value everyone having an even shot. My budget reflects what we can do to lift the burden on hard-working Americans. Too many people have been left behind or treated like they're invisible. I promise you, I see you. Families have started to breathe a little easier, but we've got further to go."
- Republicans are criticizing the plan, including House Speaker Kevin McCarthy calling Biden's proposal "completely unserious" on Twitter. McCarthy continued:
"Mr. President: Washington has a spending problem, NOT a revenue problem."
Updated February 3, 2023
- President Biden and Speaker Kevin McCarthy discussed America's debt ceiling at the White House on Wednesday. Biden insisted that Congress needs to pass a debt-limit increase with no strings attached to avoid a financial crisis, which Republicans refuse to do without cuts in federal spending.
- While the President told McCarthy he would not negotiate on raising the ceiling, he does welcome a "separate discussion with congressional leaders about how to reduce the deficit and control the natural debt while continuing to grow the economy."
- After the meeting, McCarthy told the press:
"No agreements, no promises. Except we will continue this conversation."
Updated January 25, 2023
- Speaking with reporters Tuesday evening, Senate Minority Leader Mitch McConnell said establishing a solution to avoid catastrophic debt default must start in the House. McConnell continued:
"I can't imagine any debt ceiling provision passed out of the Senate with 60 votes could actually pass this particular House. I think the final solution to this particular episode lies between Speaker McCarthy and the president."
- Speaker of the House Kevin McCarthy said he wants to find common ground with the Biden administration to create a "responsible debt ceiling" and eliminate careless government spending.
- Biden has maintained that the debt ceiling must be addressed "without conditions" and that he will not agree to spending cuts to avoid failure to make payments. McCarthy called Biden's nonnegotiable stance "irresponsible." McConnell believes the House is being entirely reasonable by "[putting] spending reductions on the table."
- The GOP has focused on cutting down Social Security, Medicare, Medicaid, food stamps, and many other federal payments and benefits. To this, Biden responded:
"Look, I have no intention of letting the Republicans wreck our economy."
Updated January 20, 2023
As Congress negotiates raising the nation's borrowing cap, here are some crucial moments to expect over the next few months:
- The White House is expected to reveal its annual budget proposal in March. This outline of the Biden administration's spending priorities will open up negotiations between them and Republicans in Congress who want to see spending cuts.
- Yellen told Congress yesterday that she initiated a "debt issuance suspension period" that will last until June 5.
- In the past, Congress was able to raise the debt ceiling before the Treasury breached the statutory limits on its ability to borrow funds. This time around, the same course of action seems unlikely. Republicans are urging the President's administration to negotiate spending cuts in order to win House Republicans' support for raising the debt limit. Democrats have rejected such proposals.
- Officials have raised the possibility of using the House's discharge petition, a procedural tool that forces a bill out of the committee and to a vote. The process of a discharge petition is long, drawn out, and undercuts the authority of the House speaker. Many also note how this tool is clumsy and infrequently successful.
What’s the story?
- The U.S. hit its debt limit earlier today, according to Treasury Secretary Janet Yellen. In a letter to Congress, Yellen said the Treasury has started implementing extraordinary measures so the government can continue paying its bills.
- These maneuvers will prevent the nation from exceeding its debt limit, which is currently at $31.4 trillion. Lawmakers are being asked to raise the ceiling so the government can continue meeting its financial obligations, including military salaries, payments to bondholders, and retirement benefits.
- The nation's debt grows when the U.S. borrows large sums of money by selling Treasury bonds to global investors and using the profit to pay off the country’s bills. Yellen wrote in her letter to Congress:
“The period of time that extraordinary measures may last is subject to considerable uncertainty, including the challenges of forecasting the payments and receipts of the U.S. government months into the future. I respectfully urge Congress to act promptly to protect the full faith and credit of the United States.”
- In August of 2021, the government’s debt limit suspension ended, prompting a similar letter from the Treasury. Yellen wrote to congressional leadership warning that failing to raise the debt ceiling “would cause irreparable harm to the U.S. economy and livelihoods of all Americans.”
What are the extraordinary measures the Treasury uses?
- The Treasury has four moves at its disposal to avoid exceeding the country’s debt limit — suspending sales of state and local securities, Government Securities Investment Fund (G Fund), Exchange Stabilization Fund, and the Civil Service Retirement and Disability Fund.
- Yellen said the Treasury is only taking two of the four steps to buy more time — suspending new investments in the Civil Service Retirement and Disability Fund and the G Fund.
- The Civil Service Retirement and Disability Fund is one of the largest federal pension funds. With a suspension period, the Treasury can redeem existing investments and stop making new ones.
- The G Fund is a retirement fund for federal employees. The Treasury has halted reinvestments, but not the G Fund’s balance or federal employee investments.
Lifting the debt ceiling
- Congress needs a simple majority in both the House and Senate to vote for any change to the debt limit. Republican lawmakers want to leverage the negotiations to try to force spending cuts, which the Biden administration is adamantly against.
- While raising the limit used to be a routine exercise for Congress, there’s now concern that it would have potentially huge consequences for the economy and markets.
Should Congress abolish the debt ceiling?
-Jamie Epstein
(Photo credit: iStock/pabradyphoto)
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The debt ceiling is a useless political artifact from a bygone era. It was a Congressional political stunt to get funding to support our war time efforts for, I believe, World War One.
No other country requires a legislative vote to permit paying back borrowed funds that have already been expended. No Business, no person, no-one has the ability to declare that they have a limit on how much of the funds that they have borrowed will be paid back to those they borrowed the funds from. No-one.
As articulated by Mitch McConnel years ago, the debt ceiling is a useful tool for the tyranny of the minority to use against the majority, by holding the full faith and credit of the US hostage.
Even McConnell has backed away form this as the economic consequences of even threatening to use the debt ceiling as a political tool greatly risks the future of the US economy, the stability of world financial markets and the World economy.
US currency has become the basis of the world economy becuase in our history, our country has never failed to repay it's debt. Our bonds are the world's safest investment in part becuase of this.
The last time this game was even seriously threatened by Republicans, the economy took a immediate downturn, the stock markets dropped rapidly and our country's credit rating dropped. These things all directly and/or indirectly effect all of the people in this country.
The MAGA morons in the House are mainly interested in getting media attention for their brazen stupidity as a means to raise funds; they really do not care about the damage they may leave in their wake.
Once Congress approves and allocates funds the debt has been accrued and, in reality, must be paid back irregardlesss of whatever shenannagins are played with the debt ceiling. If the Congress wants to better control spending and the increased debt, then do so when legislative programs are passed and funds are allocated.
The trump's tenure saw the largest national debt increases of late, just as George Bush's tenure did. The National debt has decreased during Obama's tenure and has been reduced in each of the first two years on Biden's tenure. Last year's reduction is on the order of $1.4 Trillion. Much of this reduction in National debt has come from the return on Biden's investments in the economic future of the country.
Biden's investments are offering good returns in much the same way that good busiiness investments in the future are expected to provide positive returns. These will continue to reduce the national deficit as they have been doing as long as those who want solely to discredit their opponents do not choose to sacrifice the full faith and credit of our country to do so - which would result in a multi-generational economic disaster for our country.
The debt ceiling is only useful as an economic weapon of mass destruction of our country should some morons choose to wield it.
Eliminate the debt ceiling for our National Security primarily and for the stupidity of leaving this economic suicide weapon on the books for these many years. There are those currently in our governance that are willfully stupid enough to use this tool no matter the consequences to the future of our country.
The Debt Ceiling is duplicative, unnecessary and dangerous. There is already an Amendment to the U.S. Constitution which requires the U.S. to always fulfill is financial obligations. The Debt Ceiling has become a dangerous game for republicans to play chicken with. By the way if they actually wanted a balanced budget, they could have had one during the Trump years by cutting the Defense Budget and rescinding the $2 Trillion Tax Cut for millionaires and billionaires!
The majority of the debt ceiling has been past administrations. But then I guess once you passed the Bill to spend the money, now the Republicans want to renege on the debts. Yes we need to start curbing our expenditures. But this is not the way.
Raising the debt ceiling must not be allowed to be held captive for partisan amendments. Budget negotiations must be separate from the debt ceiling!
This is a bit of a weird question given the current congress has made it clear in no uncertain terms they plan to take our country hostage and blackmail them into cutting social security and Medicare programs before they will agree to make payments on our debt (it's like refusing to make credit card payments). Because they don't care if they burn our country, its economy, and the world's economy down. They don't care if they violate the constitution. Seriously, anyone supporting the gop that still thinks they are supporting the constitution these days, haven't read it.
However, if the gop does this, which seems likely, they only way to avoid this is for Biden to overrule Congress using the stipulation in the 14th amendment, stating the USA always pays its debits. Of course, this is basically a scorched earth unprecedented approach having the president overruling congress. It will be a huge hot mess, but it might be the only option if Congress decides to both blackmail us while playing a game of chicken against their constitutional duty.
Yes the debt limit is arcane and makes no sense anymore, just as the electoral college makes no sense it's time to move on and fix things like this. There should be no more permanent judges on the Supreme Court another idea that's time has long passes. Addition no one should be allowed to be in Congress more than two terms or three terms in the Senate. I'm sick of these people who get in there raking millions and do everything they can to make more millions for themselves and nothing but argue among themselves while the country suffers.
Some home we need to reign in our spending like a young person with their first credit card. I fully understand ful filling our responsibilities. But we are worse than the state of California in spending. Everyone wants money out of the trough, but there is only one pump feeding it. Our military budget is the biggest in the world and it all does not go to service members pay. It goes to dishonest contractors. Always has. I agree we need to reduce our spending, but this debt has been produced by Congress already. They don't even look or debate on budgets anymore, just rubber stamp anything in front of them. But this is my feelings. NDOW neither my Representative or two Senators could care less. So, why should I even address this, they won't. I have one who will go with the Republican flow and two who will vote us deeper in debt. Guess I should just be quiet and watch our country fold.
I feel getting rid of the debt ceiling maybe difficult. First we need to raise the debt ceiling for paying the Nations bills. For those working the Federal Government can get paid, for those of us living Social Security get our monthly income, and for our Medicare along with Medicaid get taken care
Of.
Once the debt ceiling is done , then you can work on the budget. They are two separate issues. The GOP is forgetting that under former President Trump, the debt ceiling was raised 3 times .
Now as for the cuts they want to make are appalling. Are they aware that in most States and Counties there are already work requirements for. SNAP and Medicaid and they want to interfere with this and make it that much harder for families who are already working that receive these services. What about us Senior Citizens who live on that fixed income of Social Security and you literally want to screw us over with our SNAP and decrease them while h will harm us. Then you want to mess with our Secondary insurance for those of us who qualify for Medicaid . Don't you realize that this helps us with transportation, dental, hearing, vision, medications and help us pay for our hospital bills. If we didn't have these services we would not survive.
Don't get me started on the Government getting involved with the Board of Education telling them they need to ban certain. books, they cant teach the truth about History. Being Woke is being aware of what goes on around you . Being educated with the correct knowledge for becoming a productive member of Society. It is not you job or place to tell children what they can and can't read. That is the parents job not the Governments. Banning Drag shows. Come on people how ridiculous can you be. Parents don't take their children to these show that take place at their bedtime in clubs that are appropriate. One has to be of legal age to be able to go to bars and clubs. Besides God made us all special, and unique. Kids aren't stupid they are aware of different types of people.
Absolutely.
Enough with the games.
Abolish the debt ceiling as soon As possible. The idea of putting the country on the verge of chapter 11 bankruptcy every few years is idiotic.
During our marriage, when unexpected bills have come in, my husband and I have had to cut back, usually on groceries, to pay our bills. The administration knew, or should have known, it could not meet what it had obligated itself. Rather than continuing to allow illegals to enter our country and obligating taxpayers to pay for housing, food, clothing, education, and healthcare for these individuals, US borders could be closed, thereby saving money. We could cut back on money and equipment sent to other countries. We don't have to fund military operations throughout the world. Discontinuing to do so would save money. Taxpayers don't need to pay for abortions in our country or countries around the world. No longer doing so would save money. There are government departments that could be dissolved because they duplicate departments within each individual state. An example is the Department of Education. Instead the federal government raises taxes on US citizens and further endangers our sovereignty by incurring increased debt through loans from an enemy country. Perhaps it is just that our leaders never learned to do without until money could be saved for a purchase. They need to learn to eat peanut butter sandwiches for dinner and stop, with their votes and executive orders, forcing citizens to pay their bills. Leaders are meant to serve the people, not put them in bandage.
The Debt ceiling should be abolished. It is an artificial construct and has become a political football that the republicans use to hold the nation hostage to get what they want that has nothing to do with paying the country's bills. Interestingly they had no problem raising the debt ceiling when trump was in the white house, proving that this latest nonsense is merely political. Playing fast and loose with the USA's credit rating is a really bad move economically. Making seniors, veterans and the military worry if they are going to continue to get their checks on time so they can feed their families is a terrible thing to do.
I have a debt ceiling too. I have worked all my life to bring it down and am now just down to my house. I will pay it off too.! Why would I not expect the same from my government????
Today, John Kirby says the US is announcing an additional aid package for Ukraine."
We have already provided financial aid amounting to more than twice the Russian defense budget and according to all reports, we are broke. Where is this money coming from? (Please don't say we borrow it from China.)
Please, the next chance you get (hopefully after the 2024 election) abolish the debt ceiling!
YES!!!!! That would be one less thing for Congress to hold hostage and put us in danger of defaulting on spending they'd already agreed to. These debt celing show downs are becoming really irritating and dangerous since the Republicans seem to be willing to bring our economy down along with the very essence of our country. There are too many rightwing idiots in Congress to trust that at some point they won't push us into a disaster.
Yes, we should do away with the Debt Ceiling it is an artificial metric.
Do away with also do away with Supreme Court both are too political.
CAUSES ASKS (AGAIN): "Should Congress abolish the debt ceiling?" ME (again): Yes. PLEASE! Only two countries, the US and Denmark, have debt ceilings. And while Denmark may be intelligent enough not to bicker over raising it if necessary to pay the bills it has already incurred, the US most definitely is not. In fact, the MAGAGOP (new word!) is entirely comfortable, if not insane, with crashing not only the US but the international economy over it. Enough already. I, for one, am sick and tired of the magagop drama, threats to multiple aspects of humanity (including my own health, safety, and welfare), vengeance narrative, and political hostage-takiing, of which the debt ceiling crisis is but the latest example. Get rid of the debt limit. Get rid of the magagop. Vote them out -- it's the only way to restore this country to sanity. .
Yes. Congress should abolish the debt ceiling.
We need to get through this increase as a temporary measure. Then it should be abolished as a useless artifact. It should be clear that when the government approves a budget the debt limit will automatically enable the governmnet to pay for the expenditures it authorized in that process. Budget approval is how governments all over the place authorize their debt.
Yay
We are the holders of the debt. We are responsible to pay for this! It is currently nearly $300,000 per TAXPAYER. Do you really want the Congress to have the power to spend as much as they want? The power of the purse ultimately is in the hand of the US citizens. Let's start being more responsible.
We have a two year window of time to do it. Get out the vote and regain the house and solidify the senate and do it.
Yes, I believe the debt ceiling should be abolished. It doesn't seem to serve a purpose other than give right wing minorities an opportunity to stress the nation by grandstanding for lost causes. The time to argue the merits of any particular spending bill is before the bill has passed, not after that proverbial horse has left the barn and we're on the brink of default.
Only after all are given a credit card without limit or repaymemnt
The debt ceiling must be made separate from add on budgetary proposals!!!!!
Congress needs to control spending