Bipartisan Negotiators Propose Tying Debt Limit To GDP As White House Prepares To Meet With McCarthy

Topline

Rep. Brian Fitzpatrick (R-Penn.) said he is working with Rep. Josh Gottheimer (D-N.J.) on a proposal that would set the federal government’s debt ceiling at a specific ratio of the nation’s total economic output rather than a fixed sum, marking signs of progress after the debt ceiling was surpassed last week and lawmakers began looking to prevent the government from defaulting on its debt.

Reps. Brian Fitzpatrick, (R-Penn.) (left), and Josh Gottheimer, (D-N.J.). (Bill Clark/CQ-Roll Call, … [+] Inc via Getty Images)

CQ-Roll Call, Inc via Getty Images

Key Facts

The deal being brokered by Fitzpatrick and Gottheimer, who co-chair the moderate House Problem Solvers Caucus, would trigger spending cuts if the U.S.’s debt exceeds a certain debt-to-gross domestic product (GDP) ratio.

Fitzpatrick expressed the importance of both raising the debt ceiling and limiting the federal deficit as part of the negotiations, telling Fox News Sunday “when you have a child that has a spending problem, you do two things: you pay their bills, and you take away their credit card.”

Fitzpatrick said previously that defaulting on the debt–something that has never happened in U.S. history, and which most economists believe would be disastrous–was “off the table.”

Big Number

124%. That’s the current debt-GDP ratio, according to the Treasury Department. The debt-GDP ratio first surpassed 100% in 2013, when both figures were at about $16.7 trillion.

Key Background

Treasury Secretary Janet Yellen said Thursday the U.S. had reached its federal borrowing cap of $31.4 trillion, triggering “extraordinary measures” to prevent a default, including suspending investments in certain federal employees’ retirement funds. Yellen estimated those “extraordinary measures” would expire on June 5, depending on how much money the government collects in spring tax receipts and other unpredictable revenue. If Congress does not raise the debt ceiling by then, the federal government will be unable to meet its obligations, leading to default. Republicans have expressed plans to demand spending cuts, or even changes to Biden Administration policies, in exchange for agreeing to raise the debt limit, but the White House has repeatedly said it will not negotiate on the issue. House Speaker Kevin McCarthy (R-Calif.) and President Joe Biden on Friday announced plans to meet to discuss the debt limit, among a “range of issues as part of a series of meetings with all new congressional leaders to start the year,” Press Secretary Karine Jean-Pierre said.

Chief Critic

Sen. Joe Manchin (D-W.Va.) said Sunday that it would be a “mistake” for the White House to refuse to negotiate with Republicans on the debt limit, but added that any cuts to Medicare and Social Security (something some Democrats fear Republicans could propose) are “not going to happen,” he said on CNN’s State of the Union. Manchin also said he has agreed to meet with McCarthy to discuss a “pathway forward” in negotiating a debt limit increase, he said on Fox Business’ Sunday Morning Futures.

Contra

Several Democrats expressed confidence in the negotiations on Sunday, including Sen. Tim Kaine (Va.), who called Biden’s planned meeting with McCarthy to discuss raising the nation’s borrowing limit “a good thing,” while Gottheimer said he was “optimistic” about the negotiations.