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White House Settling the Debt Ceiling Crisis Through a Deal

The White House is considering possibly compromising with House Republicans on government spending to resolve the ongoing stalemate over the federal debt ceiling.

White House To Resolve Debt Ceiling Crisis with a Deal

The White House takes a strategic step toward resolving the ongoing impasse by leaving room for compromise. The White House has signaled its readiness to negotiate with House Republicans on government spending to resolve the federal debt ceiling. This approach could satisfy both parties and prevent a disastrous economic outcome. Through a mutually beneficial agreement, both parties could claim success and prevent significant harm to the nation’s economy.

President Biden has maintained a firm stance against the proposed spending cuts by Republicans in exchange for their approval to raise the debt limit. He has argued that it would be inappropriate to reward the GOP for their hostage-taking tactics that could harm the U.S. economy. Conversely, Speaker Kevin McCarthy has insisted that the House only lift the debt limit after securing spending cuts. One potential solution to this impasse, which has been discussed widely in both the White House and Congress, is to reach an agreement open to differing interpretations by each party. It could allow President Biden to claim that he did not give up anything in exchange for the debt limit increase, while McCarthy could argue that he secured concessions on spending.

White House and Republicans Consider “two-track” Negotiation to Resolve Crisis

With the threat of economic catastrophe looming, lawmakers are increasingly pressured to find a way out of this impasse. The possibility of a “two-track” negotiation is gaining momentum following the announcement on Monday that President Biden has invited Speaker McCarthy and other top congressional leaders for a meeting next week. The Treasury Secretary, Janet L. Yellen, has also cautioned Congress that the nation faces a risk of default as early as June 1st if the debt limit is not raised. This has renewed the urgency for both parties to discuss and explore possible solutions to the crisis.

For months, President Biden has maintained that while negotiations over government funding are necessary, talks over the debt limit need to be discussed. It has led to speculation about the potential for an implicit compromise between the parties. Liberal economist and White House ally Dean Baker suggest that President Biden and Speaker McCarthy could frame a potential agreement as a win for both parties. They could claim that they made a deal on government spending while also asserting that they secured concessions on the debt ceiling, despite these two positions being opposite. The hope would be that they could sell this arrangement to their respective bases.

The White House has publicly announced that it is committed to its position that House Republicans should lift the debt ceiling without making any demands or seeking concessions. On Tuesday, White House press secretary Karine Jean-Pierre emphasized that President Biden is open to discussions regarding government spending levels. However, she clarified that the administration would not negotiate the obligation to pay for legally approved programs and bills.

White House Aides Recognize the Need to Negotiate with GOP to Avoid a Government Shutdown

Aides working for the White House have acknowledged that negotiations with Republicans will be necessary to avoid a government shutdown, as federal agency funding will run out in September. While President Biden is willing to meet with Speaker McCarthy, White House press secretary Karine Jean-Pierre has emphasized that the administration will not negotiate on whether or not the debt limit should be extended, as this is non-negotiable. Jean-Pierre clarified that the administration is open to discussions about appropriations and the budget, but House Republicans must fulfill their constitutional duty and act to raise the debt ceiling.

White House Settling the Debt Ceiling Crisis Through a Deal
White House Settling the Debt Ceiling Crisis Through a Deal
Source: Web

The distinction between negotiating over the debt limit and negotiating over government spending may be a subtle one. According to Jean-Pierre, in the upcoming debt ceiling meeting, Biden plans to start a separate process to address the budget and appropriations. White House spokesman Michael Kikukawa echoed this sentiment, emphasizing that Biden will stress the need for Congress to act to avoid default without conditions while also exploring a separate avenue to discuss the budget. However, even if both parties agree to this approach, significant obstacles still must be overcome.

The initial challenge in negotiating a compromise between the two parties is the wide gap between their positions. The House recently passed a bill proposing over $100 billion in spending cuts for next year’s federal budget, while the Biden administration insists that spending should not be reduced. Given the growing confidence of House conservatives calling for even deeper cuts, it seems unlikely that this significant divide can be bridged quickly.

Informal Deal on Government Spending Could Resolve Immediate Debt Limit Challenge

The House bill proposes canceling Biden’s student loan forgiveness plan and rescinding clean energy funding from last year. Failure to reach an agreement on raising or suspending the limit could result in unprecedented consequences, such as a global financial crisis and a recession in the U.S. This would be the first time the country has ever defaulted on its debt. A handshake deal between Biden and McCarthy on government spending could resolve the debt limit issue without finalizing a full budget agreement.

The appropriations process establishes spending levels for federal agencies and other parts of the government every year, unlike the debt limit that concerns whether the government will default on its debts. Conflicts over spending levels have led to partial or full government shutdowns that are harmful but much less disastrous than a default. This issue will be resolved once Biden meets with congressional leaders next week.

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