Debt limit progress as Biden, McCarthy name top negotiators to avert national default

By alexandreManagement

Debt limit progress as Biden, McCarthy name top negotiators to avert national default

President Biden and House Minority Leader Kevin McCarthy have named their top negotiators to work towards a resolution to the debt limit crisis, as the deadline to avoid national default looms. The Democratic appointee, Shalanda Young, is currently serving as the acting director of the Office of Management and Budget, while the Republican appointee, Representative John Katko, serves on the House Homeland Security Committee. As negotiations begin, it remains uncertain whether Congress will come to an agreement before the October 18th deadline.

Background

The United States currently has a statutory debt limit of $28.4 trillion, which means that the federal government can only borrow up to this amount to pay its bills. The limit was suspended for two years in 2019, but it has since been reinstated. In August, Treasury Secretary Janet Yellen warned that the government would run out of cash to pay its bills if the debt limit was not raised or suspended by October 18th. Failure to raise the debt limit could result in severe economic consequences for the country.

Previous Attempts at Raising the Debt Limit

In September, Democrats attempted to pass a bill to suspend the debt limit through December 2022, but it was blocked by Republicans in the Senate. Last week, Senate Majority Leader Chuck Schumer filed a procedural motion to allow Democrats to raise the debt ceiling on their own, without Republican support. However, this tactic is unlikely to succeed, as it would require all 50 Democrats to vote in favor of it.

Republicans have argued that Democrats should raise the debt limit through the budget reconciliation process, which would allow them to pass the measure with a simple majority in the Senate. However, Democrats have said that they do not want to use reconciliation for this purpose, as it would take time and delay other legislative priorities.

Current Negotiations

With the deadline fast approaching, President Biden and House Minority Leader Kevin McCarthy have named their top negotiators to work towards a resolution. Shalanda Young, the Democratic appointee, has previously served as the staff director for the House Appropriations Committee and is considered a skilled negotiator. John Katko, the Republican appointee, is known for his work on cybersecurity issues and has been involved in previous negotiations over infrastructure legislation.

The two negotiators are expected to begin discussions this week, but it remains unclear whether they will be able to reach a deal before the deadline. Democrats have said that they would prefer to pass a standalone bill to raise the debt limit, while Republicans have suggested including it in a larger spending package. Both sides have acknowledged the urgency of the situation, but it is unclear whether they will be able to overcome their differences.

Potential Consequences of Default

If Congress does not raise or suspend the debt limit by October 18th, the federal government will be unable to pay its bills, including Social Security benefits, military salaries, and debt payments. This could cause major disruptions in the economy, as well as damage the country’s credit rating and make it more expensive to borrow money in the future. In addition, a default could lead to a global financial crisis, as the United States is seen as a safe haven for investors around the world.

The debt limit crisis is a pressing issue that requires urgent action from Congress. While both Democrats and Republicans have acknowledged the seriousness of the situation, there is still a wide gap between their positions. The appointment of negotiators by President Biden and House Minority Leader Kevin McCarthy is a positive step, but it remains to be seen whether they will be able to reach a compromise before the October 18th deadline. The consequences of a default would be severe, and it is in the best interest of all parties to work towards a solution that avoids that outcome.