US Debt Ceiling Negotiations Continue

Facts

• US Pres. Joe Biden is set to resume talks with House Speaker Kevin McCarthy (R-Calif.) Tuesday regarding raising the federal debt ceiling. As the GOP majority wants the debt limit to include cuts to federal spending, Biden and the Democrats want a "clean" debt ceiling increase with no ties to policy.¹
• While the two sides do not appear to be in full agreement, the White House has not ruled out the annual spending caps desired by Republicans, and the GOP is not insisting on conditions Biden has ruled off limits, such as repealing the green-energy incentives in Biden's Inflation Reduction Act of 2022.²
• With the US potentially defaulting on its debt as soon as June 1, sources close to the talks said Tuesday's meeting — which will include the majority and minority leaders of both the House and Senate — will follow "productive" staff-level negotiations over the weekend.³
• House Republicans passed a $1.5T debt ceiling increase paired with $4.8T in spending cuts. However, Democrats oppose certain aspects of that bill, including a repeal of Biden's student-loan forgiveness and an increase in work requirements for some benefit programs.²
• Issues such as clawing back unspent COVID funds and speeding up the permit process for energy projects have also shown the potential for compromise. However, regarding spending caps, Republicans want a 10-year deal while Democrats want two years.⁴
• Biden, who is expected to travel to Japan for the G7 summit on Wednesday, has also floated the idea of lifting the borrowing cap without Congress by invoking the 14th Amendment. Some legal experts claim it's lawful, though it would lead to swift legal action.³

Sources: ¹The Hill, ²Reuters, ³CNN, and ⁴Wall Street Journal.

Narratives

• Republican narrative, as provided by National Review. Before former Pres. Obama ended the practice of respectfully negotiating debt ceiling increases in 2011, both parties understood the importance of compromise when making such significant economic decisions. Biden has been at the mercy of his party's progressive wing since his inauguration, which is why he continues to reject calls for common sense spending cuts and even threatened to use Section Four of the 14th Amendment — which relates to paying back Civil War debts — if he doesn't get his radical wishes granted.
• Democratic narrative, as provided by New York Times. The same people who believe Pres. Biden wasn't legitimately elected are now taking the US economy hostage. The GOP essentially scribbled an arbitrary debt increase number down on paper with no way to achieve it, and now it's acting like it offered a fair starting point for negotiations. Biden and the Democrats must stop pretending that the Republicans are being reasonable and start searching for ways to ensure the debt limit is increased while federal programs aren't terminated.