What to Know in Washington: Biden, McCarthy Meet On Debt Limit

President Joe Biden is scheduled to meet Speaker Kevin McCarthy (R-Calif.) and other congressional leaders Tuesday to discuss the debt ceiling.

Biden and congressional Republicans are locked in a staredown over raising the $31.4 trillion borrowing limit, with GOP leaders demanding promises of future spending cuts before they approve a higher ceiling. Biden has insisted on a “clean” increase, with budget talks kept separate.

Source: Bloomberg

House Financial Services Committee Chair Rep. Patrick McHenry (R-N.C.) suggested that a deal for a short-term debt limit increase is an option, echoing comments by White House Budget Director Shalanda Young on Thursday.

“Everything is on the table at this point,” McHenry said on CBS’s “Face the Nation” on Sunday. “The key thing that has to be in this equation is addressing our fiscal house, short term and long term.”

The federal government reached the statutory cap on borrowing in January and the Treasury has since been using special accounting measures to make cash available. Those measures could run out as soon as June 1, Treasury Secretary Janet Yellen told Congress last week.

Republicans have sought to increase leverage over Biden by narrowly passing a plan that calls for an increase in the debt ceiling by $1.5 trillion — enough to prevent a default until next March 31 — in exchange for $4.8 trillion in budget cuts.

Almost all Senate Republicans said in a letter released Saturday that they’d oppose allowing a vote on legislation with a “clean” debt-ceiling increase.

Biden said on Friday he wasn’t yet prepared to invoke the 14th Amendment to avert a breach of the debt ceiling, but didn’t rule out the possible executive action.

Invoking the amendment would seem certain to prompt a high-stakes legal fight that risks roiling markets. Yellen said there are “simply no good options” for solving the debt limit stalemate other than Congress lifting the cap, and cautioned that resorting to the 14th Amendment would provoke a constitutional crisis.

“We should not get to the point where we need to consider whether the president can go on issuing debt” without Congress lifting the debt ceiling, Yellen said Sunday on ABC’s “This Week.”

Constitutional scholars and economists have been split on the idea that the administration continue issuing debt by citing a provision of the Constitution that says the validity of public debts “shall not be questioned.” Christopher Condon has the full story.

BIDEN’S AGENDA

• At 1:45 p.m., Biden will deliver remarks on new protections for travelers impacted by flight delays or cancellations. Transportation Secretary Pete Buttigieg will also attend.
• The president will host a 7:45 p.m. screening of “American Born Chinese” in recognition of Asian American, Native Hawaiian, and Pacific Islander Heritage Month.

CONGRESS’ SCHEDULE

• The House and Senate return tomorrow

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To contact the reporters on this story: Brandon Lee in Washington at blee@bgov.com; Michaela Ross in Washington at mross@bgov.com

To contact the editor responsible for this story: Kayla Sharpe at ksharpe@bloombergindustry.com