The White House has postponed a meeting between U.S. President Joe Biden and top lawmakers that was scheduled for Friday and rescheduled it for early next week. This meeting is centered around talks to raise the government’s $31.4 trillion debt ceiling and avoid a catastrophic default. Aides from both sides have started discussing ways to limit federal spending in order to reach an agreement on the debt limit.
The House Republican bill to suspend the borrowing limit passed in April would cut government spending to 2022 levels, cap its future growth below inflation, and repeal incentives for renewable energy, electric vehicles, and other climate-friendly technology passed in the Biden legislation.
Biden’s fiscal 2024 budget request relies on tax increases to reduce deficits while proposing to increase discretionary spending by 5 percent next year. However, House Republicans want to cut agency budgets on average by 8 percent while increasing defense and veterans spending, which would mean other programs would face steeper cuts.
The postponement of the meeting was not seen as a sign of trouble, but rather an indication that staff negotiators needed more time to talk before the principals met again. White House officials acknowledge that they must accept some spending cuts or strict caps on future spending if they are to strike a deal, while insisting they must preserve Biden’s signature climate legislation that passed along party lines last year. The fact that spending cuts and caps are under discussion could be a sign of progress in talks where Democrats have long pushed for an unconditional lifting of the debt ceiling, while Republicans have demanded a slew of policy changes in addition to sharp spending cuts.
Biden is set to leave the country next week to attend the G7 meeting in Japan, and there are just a few days left when he and House and Senate leadership will be in town before the June 1 deadline when the U.S. federal government could run out of money to pay its bills.
A short history of the debt ceiling
The history of the debt limit in the United States is a contentious one. In 1917, Congress passed the Second Liberty Bond Act, which created the debt limit as a way to control the government’s spending during World War I. However, since then, Congress has raised the debt ceiling dozens of times, usually without controversy.
The debt ceiling became a contentious issue in the early 2010s during the Obama administration, with many Republican lawmakers using it as a bargaining chip to try to extract concessions from both the moderate wings of the Republican Party and Democrats. In 2011, for example, Republicans demanded spending cuts in exchange for raising the debt ceiling.
Failure to reach an agreement could lead to a catastrophic default, as the U.S. federal government could run out of money to pay its bills.
