On April 26, the GOP-Led House Passed Bill to Hike Debt Limit and Slash Spending.
“Happy to meet with McCarthy, but not on whether or not the debt limit gets extended,” Biden said. “That’s not negotiable.”
In exchange for raising the debt limit by $1.5tn into 2024, the bill would roll back overall federal spending.
Democrats derided the Republican plan as a “ransom note”, a “shakedown” and “an unserious bill” that was courting financial danger.
Key Provisions
- Claw back unspent Covid-19 funds.
- Impose tougher work requirements for recipients of food stamps and other government aid.
- Halt Biden’s plans to forgive up to $20,000 in student loans.
- End many of the landmark renewable energy tax breaks Biden signed into law last year. It would tack on a sweeping Republican bill to boost oil, gas and coal production.
Hello Joe, the Ball is in Your Court
Republicans only had 4 votes to spare but with some last minute haggling, the bill passed 217-215.
It wasn’t a pretty serve by McCarthy, but the ball cleared the net and landed in play.
The only way to get the ball back in the Republican court would be for the Senate to pass a measure or amend the House bill.
Senate Republicans Say No to Any Clean Debt-Limit Increase
Bloomberg reports Senate Republicans Say No to Any Clean Debt-Limit Increase
A group of 43 Senate Republicans including Minority Leader Mitch McConnell said they’d oppose allowing a vote on legislation increasing the US debt limit with no strings attached, saying “substantive spending and budget reforms” must be part of the package.
The group’s letter to Majority Leader Chuck Schumer included almost every Republican in the chamber and showed they have the votes to block legislation, raising the stakes on President Joe Biden and Democrats who control the chamber.
“Our economy is in free fall due to unsustainable fiscal policies,” GOP senators said in the letter. “This trajectory must be addressed with fiscal reforms.”
Yellen Says No Good Alternative to Congress Lifting Debt Cap
Treasury Secretary Janet Yellen says No Good Alternative to Congress Lifting Debt Cap
Treasury Secretary Janet Yellen said there are “simply no good options” for solving the debt limit stalemate in Washington 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.”
“This would be a constitutional crisis,” she said.
Constitutional scholars and economists have been split on the idea that the administration continue issuing debt by citing a provision of the US Constitution that says the validity of public debts “shall not be questioned.”
Yellen deflected several questions on whether Biden might use that option, returning time and again to her insistence that Congress lift the ceiling.
“All I want to say is that it’s Congress’s job to do this,” she said. “If they fail to do it, we will have an economic and financial catastrophe that will be of our own making, and there is no action that President Biden and US Treasury can take to prevent that catastrophe.”
President Biden is meeting McCarthy on Tuesday. But if Biden sticks with his clean hike is not negotiable stance they may as well not meet.
This is the opposite setup of prior debt ceiling negotiations where the Senate passed a measure and House Republican said they would not budge.
Ultimately they did.
Waiting Game
The closer this get to the wire without Democrats making a move, the better the setup for the Republicans.
If Democrats refuse to take a swing at the ball, they lose outright or risk a constitutional crisis.
CBO Analysis
Here’s the Congressional Budget Office take on McCarthy’s Limit, Save, Grow Act
President Biden’s Blatant Hypocrisy and McCarthy’s Limit, Save, Grow Act of 2023
Let’s review statements made by Senator Biden in 2004 and 2006 when he voted against raising the debt ceiling, also a look at Speaker McCarthy’s Limit, Save, Grow Act of 2023.
For discussion, please see President Biden’s Blatant Hypocrisy and McCarthy’s Limit, Save, Grow Act of 2023
This post originated at MishTalk.Com
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Mish
“If they fail to do it, we will have an economic and financial
catastrophe that will be of our own making, and there is no action that
President Biden and US Treasury can take to prevent that catastrophe.”
sucks because it represents a retrograde tax on success, but a lot of
the success of these people was related to how fake money works. They
were closer to the spigot in DC and thus got showered with rewards while
someone downstream got the dreggs.”
twin deficits have an insidious, if not an incestuous, relationship. Positive
interest rate differentials are significantly responsible for the dollar’s
exchange rate support. And an “overvalued” dollar in turn is the
principal contributor to our burgeoning trade deficits.
is threatened by our protracted huge trade deficits (since the
U.S. became a debtor nation in 1985). Given the present and prospective trade
deficits, this situation is not likely to continue for long. Foreigners will
simply be saturated with excess dollars.
large. Any significant repatriation of these funds, by reducing the supply of
loan-funds, will force interest rates up – thus increasing the federal deficit
and the burden of all new debt. These events alone could trigger a downswing in
the economy resulting in more unemployment, more unemployment compensation,
less tax revenues and larger federal deficits. Truly a vicious cycle.
year 2023, the Congressional Budget Office estimates—$430 billion more
than the shortfall recorded during the same period last year—and
consistent with projections CBO released in February.”
over … several years ago. Stop throwing my money at it. If a business
cant make it in 2023/2024, its not because of Covid”
on all debt, public and private sectors, are related to a cumulative figures;
and since the multiplier effects of debt expansion on income, the ingredient
from which the charges must inevitably be paid, is a non-cumulative figure, it
is inevitably that a mathematical time will arrive when further debt expansion
is no longer a practical or possible expedient, either to provide full
employment or to keep debt charges with tolerable limits.