President Biden said on Sunday he believed he had the authority to challenge the constitutionality of the country’s borrowing limit, but did not believe such a challenge could succeed in time to avoid a default on the federal debt if lawmakers didn’t raise the limit soon.
“I think we have the authority,” Mr Biden said at a news conference following the Group of 7 summit in Hiroshima, Japan. “The question is whether it can be done and invoked in time.”
Mr Biden added that after the current crisis is resolved, he hopes to “find a rationale and take it to court” to decide whether the debt limit violates a clause in the 14th Amendment stating that the United States to pay its debts. He also said that when he met with world leaders, he had been unable to assure them that America would not pay its debts — an event that economists say could trigger a financial crisis that would engulf the world.
“I can’t guarantee they won’t force bankruptcy by doing something outrageous,” Biden said, referring to Republicans in Congress who have pushed for major cuts in federal spending in exchange for raising the borrowing limit.
Mr Biden and Speaker Kevin McCarthy are negotiating a fiscal package that would include raising the borrowing ceiling. They remain far apart on key issues, including caps on federal spending, new job requirements for some recipients of federal poverty relief aid, and funding designed to help the IRS crack down on high-earners and tax-dodging companies.
The two men were scheduled to speak by phone shortly after the press conference on Sunday, as Mr Biden returned to Washington in hopes of rekindling the spluttering talks. The call follows a weekend in which Republican leaders and White House officials exchanged accusations from half a world away — punctuated by Mr Biden’s attacks on Republicans in the press conference.
Treasury Department officials estimate there are just over two weeks before the federal government could lose its ability to pay its bills on time, forcing bankruptcy. Both Mr Biden and Mr McCarthy expressed growing optimism late last week that they could reach an agreement that would pave the way for Congress to raise the borrowing limit while cutting some federal spending, which Republicans have pushed for as condition of any debt. – increase limit.
“The difficulty is that nothing has been agreed at all,” said Mr. McCarthy on Fox News’ “Sunday Morning Futures.” “All the discussions we had before, I felt we were in a place where we could agree together, that we would compromise.”
Instead, Mr. McCarthy argued, “the president is going abroad and now wants to change the debate”.
Treasury Secretary Janet L. Yellen is expected to provide another update to Congress on the federal government’s cash balance sometime this week. On Sunday, Ms Yellen indicated that her projections that the United States might not be able to pay all its bills on time from June 1 had not changed.
“I certainly haven’t changed my rating, so I think that’s a hard deadline,” Ms. Yellen said on NBC’s “Meet the Press.”
Ms Yellen noted that the government expected to receive significant tax payments on June 15 that could extend the so-called X date later into the summer. But she warned that it would be very difficult to meet that date and that the chances of getting there are “quite slim”.
The finance minister, who warned last week that bankruptcy would “create an economic and financial catastrophe,” said she was not exaggerating the seriousness of the looming crisis.
“Tough choices will be made if the debt ceiling is not raised,” said Ms Yellen, explaining that if the United States ran out of money to pay all of its bills, some would have to go unpaid.
Hope has waned at least a little in the last 48 hours. Mr Biden’s aides accused Republicans of falling back on key negotiating areas, and Republicans accused the White House of refusing to budge on top priorities for conservatives.
Mr Biden on Sunday criticized Republicans for not considering raising additional tax revenues to reduce future budget deficits as part of the negotiations. He said he proposed a discretionary spending cap that would save $1 trillion over a decade compared to baseline projections.
“It’s time Republicans accept that there is no budget deal that can only be made on their partisan terms,” he said.
Representative Jodey C. Arrington, a Texas Republican and chairman of the Budget Committee, flatly ruled out on Sunday that Republicans would accept tax increases as part of a debt reduction deal, despite pressure from the president.
“It’s not on the table for discussion,” Mr. Arrington said on ABC’s “This Week.” “Now is not the time to tax our economy or working families.”
On the same program, Maryland Democrat Senator Chris Van Hollen said that given the state of the negotiations, he felt it was time to focus on filing a discharge request in the House to allow Democrats to pass a measure with the help of a handful of Republicans.
“I’m very concerned about where we are now,” said Mr. Van Hollen, noting that the petition would only require five Republicans to join 213 Democrats to force a vote. “It seems to me that we should be heading in that direction soon.”
Some of the barbs traded by the parties appeared to be for strengthening their bases. Hard-core moneymakers in the House have urged Mr. McCarthy to demand much larger concessions from Mr. Biden. Some progressive Democrats have urged Mr Biden to break off negotiations and instead act unilaterally to challenge the debt limit on constitutional grounds.
A clause in the 14th Amendment states that “the validity of government debt” issued by the U.S. government “shall not be questioned.” Some legal scholars say the border is constitutional. But others argue the clause requires the government to continue issuing new debt to pay bondholders, effectively exceeding the country’s legal borrowing limit, which is overseen by Congress.
Louisiana Senator Bill Cassidy said using the 14th Amendment would be too big a step.
“It’s yet another example of how the president is taking the constitutionally delegated spending power from the House of Representatives and trying to pool it into the White House,” he said on CNN’s “State of the Union.”
The two sides reached an agreement during talks over the past week, including on reclaiming some unspent funds from previously approved Covid relief legislation. They also broadly agreed on some kind of ceiling on discretionary federal spending for at least the next two years. But they’re hung up on the details of those limits, including how much to spend on discretionary programs in total next fiscal year — and how to split that spending between the military and other programs.
The latest White House bid would keep military spending as well as other spending — including education, scientific research and environmental protection — constant from the current fiscal year to the next fiscal year, according to a person familiar with both sides’ proposals. That move wouldn’t cut nominal spending until it’s adjusted for inflation, which Republicans are hard at work on. Asked by a reporter on Sunday, Mr Biden said the cuts he had proposed would not trigger a recession.
A bill passed by Republicans last month that coupled spending cuts with an increase in the debt limit would generate net savings of about $5 trillion over a decade compared to current projections.
The Republicans’ latest proposal includes a nominal decrease in total discretionary spending next year. But that discount isn’t evenly distributed; in their plan, military spending would continue to rise, while other programs would see deeper cuts.
Mr Biden’s bid would set a two-year spending cap. Republicans would put them up for six years.
Republicans have also made several attempts to cut money that White House officials have objected to. They include new job requirements for Medicaid recipients and the Temporary Assistance for Needy Families program. They would also make it more difficult for states to request waivers to work requirements for certain recipients of federal food aid who live in areas of persistently high unemployment — a proposal that was not in the Republican debt limit bill passed by the House.
Republicans also continue to push for a reduction in enforcement funding for the IRS, a move that the Congressional Budget Office estimates would widen the budget deficit by reducing future federal tax receipts. And they’ve been trying to include some provisions from a tough immigration bill recently passed by the House, according to a person familiar with the bill.
“We are all concerned about deficits and fiscal responsibility, but deficits can be addressed by changes in spending as well as changes in revenue,” Ms. Yellen said, adding she was “deeply concerned” about proposals from Republicans to cut funding. for the tax authorities
Republican leaders on Saturday continued to blame White House negotiators for what they called the deterioration in the discussions.
“The White House is going backwards in negotiations,” McCarthy wrote on Twitter. In a separate post, he blamed Mr Biden for the deadlock, saying the president did not “think there was a single dollar of savings to be found in the federal government’s budget.”
Biden insisted on Sunday that he was willing to make cuts. He also suggested that some Republicans were trying to crash the economy by not raising the borrowing limit, to hurt Biden’s hopes of winning re-election.
If the nation defaulted, Mr Biden said “I would be blameless” on the grounds – meaning it would be the fault of the Republicans. But, he said, “about the politics of it no one would be innocent.”
“I think there are some MAGA Republicans in the House who know the damage it would do to the economy, and because I am president and the president is responsible for everything, Biden would take the blame,” he said.
Alan Reportport, Carl Hulse And Chris Cameron reporting contributed.
