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Biden Says He Has Authority to Challenge Debt Limit, but No Time

President Biden said on Sunday that he believed he had the authority to challenge the constitutionality of the nation’s borrowing limit but that he did not believe such a challenge could succeed in time to avoid a default on federal debt if lawmakers did not raise the limit soon.

“I think we have the authority,” Mr. Biden said at a news conference after the Group of 7 summit in Hiroshima, Japan. “The question is could it be done and invoked in time.”

Mr. Biden added that after the current crisis is resolved, he hopes to “find a rationale and take it to the courts” to decide whether the debt limit violates a clause in the 14th Amendment stipulating that the United States must pay its debts. He also said that, while meeting with world leaders, he had not been able to assure them that America would not default on its debt — an event that economists say could set off a financial crisis that would sweep the globe.

“I can’t guarantee that they will not force a default by doing something outrageous,” Mr. Biden said, referring to congressional Republicans who have insisted on deep cuts to federal spending in exchange for raising the borrowing limit.

Mr. Biden and Speaker Kevin McCarthy are negotiating over a fiscal package that would include raising that borrowing ceiling. They remain far apart on key issues, including on caps for federal spending, new work requirements for some recipients of federal antipoverty assistance and funding meant to help the I.R.S. crack down on high earners and corporations that evade taxes.

The two men were set to speak by telephone on Sunday shortly after the news conference as Mr. Biden made his way back to Washington in hopes of re-energizing the sputtering talks. The conversation will follow a weekend in which Republican leaders and White House officials have traded accusations from half a world away — punctuated by Mr. Biden’s attacks on Republicans in the news conference.

Treasury Department officials estimate that there are just over two weeks before the federal government could lose its ability to pay its bills on time, forcing a default. Both Mr. Biden and Mr. McCarthy expressed rising optimism late last week that they could reach an agreement that would pave the way for Congress to raise the borrowing limit while also reducing some federal spending, which Republicans have insisted on as a condition for any debt-limit increase.

“The difficulty is nothing’s agreed to at all,” Mr. McCarthy said on Fox News’s “Sunday Morning Futures.” “All the discussions we had before, I felt we were at a place that we could agree together, that we would have compromise.”

Instead, Mr. McCarthy contended, the president “goes overseas and now he wants to change the debate.”

Treasury Secretary Janet L. Yellen is expected to provide another update to Congress on the federal government’s cash balance sometime this week. On Sunday, Ms. Yellen indicated that her projections that the United States could be unable to pay all of its bills on time as soon as June 1 had not changed.

“I certainly haven’t changed my assessment, so I think that that’s a hard deadline,” Ms. Yellen said on NBC’s “Meet the Press.”

Ms. Yellen noted that the government was expecting to receive substantial tax payments on June 15 that could extend the so-called X-date later into the summer. But she warned that it would be very difficult to get to that date and that the odds of making it that far are “quite low.”

The Treasury secretary, who warned last week that a default would “generate an economic and financial catastrophe,” said she was not exaggerating the gravity of the looming crisis.

“There will be hard choices to make if the debt ceiling isn’t raised,” Ms. Yellen said, explaining that if the U.S. ran out of money to pay all its bills, some would have to go unpaid.

Those hopes have dimmed at least slightly in the last 48 hours. Mr. Biden’s aides accused Republicans of backsliding on key areas of negotiation, and Republicans accused the White House of refusing to budge on top priorities for conservatives.

Mr. Biden criticized Republicans on Sunday for not considering raising additional tax revenue to reduce future budget deficits as part of the negotiations. He said he had proposed a discretionary spending cap that would save $1 trillion over a decade compared with baseline projections.

“It’s time for Republicans to accept there is no budget deal to be made solely on their partisan terms,” he said.

Representative Jodey C. Arrington, Republican of Texas and the chairman of the Budget Committee, on Sunday flatly ruled out Republicans’ accepting any tax increases as part of a debt-limit deal despite the president’s push.

“It’s not on the table for discussion,” Mr. Arrington said on ABC’s “This Week.” “This is not the time to put a tax on our economy or on working families.”

Some of the barbs appeared to be meant to shore up each party’s base. Hard-line spending hawks in the House have urged Mr. McCarthy to demand far greater concessions from Mr. Biden. Some progressive Democrats have pushed Mr. Biden to cut off negotiations and instead act unilaterally to challenge the debt limit on constitutional grounds.

Senator Bill Cassidy, Republican of Louisiana, said using the 14th Amendment would be an overreach.

“It is one more example of the president taking the constitutionally delegated authority of spending from the House of Representatives and trying to kind of aggregate it into the White House,” he said on CNN’s “State of the Union.”

The two sides have found some agreement in talks in the last week, including on clawing back some unspent funds from previously approved Covid relief legislation. They have also agreed in broad terms to some sort of cap on discretionary federal spending for at least the next two years. But they are hung up on the details of those caps, including how much to spend overall next fiscal year on discretionary programs — and how to divide that spending among the military and other programs.

The latest White House offer would hold both military spending and other spending — which includes education, scientific research and environmental protection — constant from the current fiscal year to next fiscal year, according to a person familiar with both sides’ proposals. That move would not reduce nominal spending before adjusting for inflation, which Republicans are pushing hard to do. Asked by a reporter on Sunday, Mr. Biden said the spending reduction he had proposed would not cause a recession.

A bill that Republicans passed last month that paired spending cuts with a debt-limit increase would bring net savings of about $5 trillion over a decade compared with current projections.

Republicans’ latest proposal includes a nominal drop in total discretionary spending next year. But that cut is not evenly distributed; in their plan, military spending would continue to rise, while other programs would face deeper cuts.

Mr. Biden’s offer would set spending caps for two years. Republicans would set them for six years.

Republicans have also proposed several efforts to save money that White House officials have objected to. They include new work requirements for recipients of Medicaid and the Temporary Assistance for Needy Families program. They would also make it harder for states to seek waivers for work requirements for certain recipients of federal food assistance who live in areas of sustained high unemployment — a proposal that was not in the Republican debt-limit bill that passed the House.

Republicans are also continuing to seek a reduction in enforcement funding for the I.R.S., a move that the Congressional Budget Office estimates would actually make the budget deficit larger by decreasing future federal tax receipts. And they have sought to include some provisions from a stringent immigration bill that recently passed the House, according to a person familiar with the proposal.

“We are all concerned about deficits and fiscal responsibility, but deficits can be addressed both through changes in spending and through changes in revenue,” Ms. Yellen said, adding that she was “greatly concerned” about proposals by Republicans to cut funding for the I.R.S.

Republican leaders on Saturday continued to blame White House negotiators for what they called the deterioration in discussions.

“The White House is moving backward in negotiations,” Mr. McCarthy wrote on Twitter. In a separate post, he blamed Mr. Biden for the impasse, saying that the president did not “think there is a single dollar of savings to be found in the federal government’s budget.”

Mr. Biden insisted on Sunday that he was willing to cut spending. He also suggested that some Republicans were trying to crash the economy by not raising the borrowing limit, in order to hurt Mr. Biden’s hopes of winning re-election.

If the nation were to default, Mr. Biden said, “I would be blameless” on the merits — meaning that it would be Republicans’ fault. But, he said, “on the politics of it, no one would be blameless.”

“I think there are some MAGA Republicans in the House who know the damage that it would do to the economy, and because I am president, and the president’s responsible for everything, Biden would take the blame,” he said.

Alan Rappeport, Carl Hulse and Chris Cameron contributed reporting.

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