Topline
House Speaker Kevin McCarthy (R-Calif.) tweeted Friday he plans to meet with President Joe Biden in an attempt to end a standoff over raising the debt ceiling, which could threaten the nation’s economy if the situation drags on.
Then-House Minority Leader Kevin McCarthy (R-Calif.) conducts a news conference with members of the … [+]
Key Facts
McCarthy tweeted he intends to “discuss a responsible debt ceiling increase to address irresponsible government spending,” after the White House extended an invitation Friday for the two to “discuss a range of issues.”
The White House reiterated in a statement Biden is not willing to make concessions to convince the Republican-controlled House to raise the debt ceiling, saying he is ready to engage in “a clear debate on two different visions for the country – one that cuts Social Security, and one that protects it.”
McCarthy promised a group of hard-right Republicans earlier this month he would demand significant spending cuts in exchange for raising the debt limit—a vow he made to secure votes he needed to win the speakership.
The federal government reached its $31.4 trillion debt ceiling Thursday.
What We Don’t Know
It’s not clear exactly what spending cuts Republicans might demand. There’s speculation the GOP may push for cuts to programs like Social Security and Medicare, but such moves would be highly polarizing within the party. Former President Donald Trump said in a campaign video Friday: “Under no circumstances should Republicans vote to cut a single penny from Medicare or Social Security.”
What To Watch For
Treasury Secretary Janet Yellen has started enacting “extraordinary measures” to avert a potential debt default, which involves shifting money from certain agencies and pausing some new investments. Yellen said the moves should stave off a potentially catastrophic default through June 5, which has been dubbed the “X-date” for the national debt.
Key Background
Most experts believe a debt default would push the economy into a recession, and even the risk of one has caused stocks to plunge before. Sluggish negotiations between former President Barack Obama and Congressional Republicans in 2011 caused major market volatility, and led credit rating agency S&P to downgrade the country’s credit rating. If an agreement is not reached by the “X-date,” the federal government will be unable to pay most of its bills, likely threatening numerous federal programs. The U.S. has never defaulted on its debt in history.
Further Reading
The Debt Ceiling, Explained—What Happens If The U.S. Doesn’t Raise It (Forbes)
Kevin McCarthy Elected House Speaker—Ending Historic Deadlock (Forbes)
Source: https://www.forbes.com/sites/nicholasreimann/2023/01/20/debt-ceiling-standoff-speaker-mccarthy-agrees-to-meet-with-biden-for-solution/