Biden and McCarthy to discuss debt ceiling as default nears.

Debt Ceiling Negotiations: Can Biden and McCarthy Find Common Ground?

After months of stalled debt ceiling negotiations, President Joe Biden and House Speaker Kevin McCarthy (R-Calif.) are set to meet on May 9 to discuss possible paths forward to prevent a looming default. The summit, which will take place at the White House, will mark the first such meeting since Feb. 1 and will also include Senate Majority Leader Chuck Schumer (D-N.Y.), Senate Minority Leader Mitch McConnell (R-Ky.), and House Minority Leader Hakeem Jeffries (D-N.Y.).

The Looming Threat of Default

Although the United States has never defaulted on its debt, Treasury Secretary Janet Yellen warned on May 1 that a default could occur as soon as June 1 if the limit on how much money the federal government can borrow to meet its financial obligations is not raised. Currently, the national debt ceiling is set at $31.4 trillion. When the United States hit that ceiling in January, the Department of the Treasury took “extraordinary measures” to create additional borrowing space to avert immediate default. Now, with those measures set to reach their limit, congressional leaders and the president will need to bridge the political divide to find common ground and a solution.

At an Impasse

While Biden and most Democrats have pushed for a “clean” debt limit hike with no conditions, Republicans have argued that continually raising the debt ceiling without balancing the federal budget only increases the financial burden on future generations of Americans. In line with that thinking, on April 26, House Republicans passed a bill that would raise the debt limit by $1.5 trillion or through the end of March 2024—whichever comes first—but would tie that increase to future spending cuts.

• Republicans have promoted the bill as a starting point for further discussion
• Democrats have branded it a “partisan wish list” with no chance of passage in the Senate

Meanwhile, House Democrats quietly introduced an unrelated bill in January as part of a covert scheme to force a vote on their own plan via a discharge petition. The move is unlikely to succeed, however, given that a majority of the Republican-controlled chamber would need to sign the petition.

Leading up to the May 9 negotiations, both sides have doubled down on their positions, with 43 Republican senators—including McConnell—telling Schumer in a May 6 letter that they would oppose any proposals for a debt limit increase that did not include “substantive spending and budget reforms.” In a May 7 tweet, Biden accused Republicans of brinksmanship, holding: “MAGA Republicans are laying out two options for us: 1.