Biden ‘Can’t Guarantee’ GOP Won’t Force Default As Debt Ceiling Deadline Nears

Topline

President Joe Biden cautioned Sunday that congressional Republicans may do something “outrageous” to force the U.S. to default on its loans, as the negotiations between congressional Republicans and the White House over whether to raise the debt ceiling remain uncertain and a June 1 deadline to avert a default looms.

President Joe Biden gestures during a news conference in Hiroshima, Japan, Sunday, May 21, 2023, … [+] following the G7 Summit.

AP/Susan Walsh

Key Facts

During a press conference after the Group of 7 summit in Japan, Biden described congressional Republicans’ demands for spending cuts in exchange for raising the debt ceiling as “extreme,” though he said he is “willing to cut spending.”

The president also said he couldn’t promise during meetings with fellow world leaders the U.S. would not default, a move that would have repercussions around the world, but he said earlier in the press conference the United States has “never defaulted on our debt and it never will.”

Biden also reiterated he was considering bypassing Congress and continuing to pay the nation’s bills by invoking an obscure clause in the 14th amendment that says the “validity of the public debt of the United States … shall not be questioned,” but noted potential legal challenges and a lack of time.

Crucial Quote

“I can’t guarantee that they will not force a default by doing something outrageous,” Biden said at the press conference, referencing congressional Republicans who have not retreated in their requests for cuts to federal spending.

What To Watch For

The Treasury has estimated the United States could become unable to pay its bills as early as June 1, triggering an economically catastrophic default. In an interview Sunday on NBC’s Meet the Press, Treasury Secretary Janet Yellen said that projection is still accurate, adding it’s unlikely the U.S. will make it to June 15—when a surge of tax revenue is expected—and be able to pay all of its bills. Yellen noted “uncertainty about tax receipts” and indicated the continued negotiations over whether to raise the debt ceiling could affect paying for government services like Medicaid and Social Security, among other things.

Chief Critic

House Speaker Kevin McCarthy said “nothing’s agreed to at all,” during an interview on Fox News’s Sunday Morning Futures. McCarthy has publicly opposed the 14th amendment strategy Biden has teased. Earlier this month, McCarthy said the Civil-War era amendment had not been discussed at a meeting the two had but described that method of resolving the debt ceiling as a failure.

Tangnet

A group of 11 senators, led by Bernie Sanders (I-Vt.), urged Biden on Friday to use the Civil War-era amendment in order to prevent the U.S. from defaulting on its debt. Invoking the amendment would allow the government to continue issuing debt without congressional approval—but it is a legally untested strategy that could draw court challenges. The senators also accused Republicans of making it “seemingly impossible to enact a bipartisan budget deal at this time” because of their demands to raise the federal borrowing limit.

Key Background

Congressional Republicans and the White House have been at odds since January over whether to raise the government borrowing limit above its current $31.4 trillion. Appointed negotiating teams have been running the talks for the last week as the parties have attempted to move towards a solution. Republicans’ goal is to cut federal spending and roll back Biden’s policy priorities. The White House wants a debt ceiling increase without conditions. Republicans made some strides last month after the House passed legislation to raise the debt ceiling by $1.5 trillion through March of next year by enacting a number of spending cuts, but the bill has no prospect of passing the Senate. Biden has said he’d be open to conceding one of those conditions—increasing the age welfare recipients are required to work to receive food stamp benefits—but some Democrats are not happy with that potential concession.