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President Biden and spokesman Kevin McCarthy agreed on Sunday to meet Monday afternoon to try to begin talks to stave off a default on the national debt. Republican decision. demands austerity in exchange for raising the debt limit.
McCarthy announced the meeting — his third with Biden this month, scheduled after the president's return from the Group of 7 summit in Japan's Hiroshima — after finishing a phone call with the president on Sunday, sounding more optimistic than before about the issue. prospects for an agreement.
The speaker said that the G.O.P. and White House negotiators would continue talks on Capitol Hill Sunday to lay the groundwork. White House negotiators left Capitol Hill on Sunday night after a two-and-a-half hour negotiating session with their Republican counterparts, but said they planned to continue working ahead of Monday's session.
Mr. Biden “has looked at some of the things he continues to look at, he hears from his members; I walked through the things I look at," McCarthy said. “I thought that part was productive. But see - there is no agreement. We are still apart.
Negotiators work against a punishing clock. The debt ceiling, the legal limit on the government's ability to borrow to pay its obligations, must be reached on June 1.
Biden and McCarthy are negotiating a tax package that would raise the cap, which Republicans have refused to do without spending cuts. They remain aloof on key issues, including restrictions on federal spending, new job requirements for some federal poverty relief recipients, and funding intended to help the IRS. Tackle big earners and tax avoiding companies.
Biden said on Sunday that he believed he had the power to challenge the constitutionality of the country's debt limit, but that he did not believe such a challenge could succeed in time to avoid a federal indebtedness if lawmakers overturned the limit. would not increase. short.
"I think we have authority," Biden said at a news conference in Hiroshima. “The question is whether it can be done in time and whether it can be invoked.”
Biden added that after the current crisis is resolved, he hopes to "find and take a case to court" to decide whether the debt limitviolates a provision of the 14th Amendmentstating that the United States must pay its debts. He also said that in meetings with world leaders, he was unable to reassure them that the United States would not pay off its debts - an event economists say could trigger a financial crisis that would engulf the world.
"I can't guarantee they won't force bankruptcy by doing something outrageous," Biden said, referring to Republican congressmen pushing for major cuts in federal spending in exchange for an increase in the borrowing limit.
"Numbers are key here," Rep. Garrett Graves, a Louisiana Republican and one of McCarthy's top negotiators, said Sunday. "The speaker was very clear: one red line is spend less money, and unless and until we get there, the rest is really irrelevant."
Treasury officials estimate there areabout two weeksbefore the government lost its ability to pay its bills on time, forcing bankruptcy. Both Biden and McCarthy expressed growing optimism last week that they could reach a deal that would pave the way for Congress to raise the borrowing limit while cutting some federal spending.
But on Friday, Republicans abruptly halted talks, sparking a weekend of choppy talks that left things in limbo and McCarthy insisting Biden reinstate himself.
Treasury Secretary Janet L. Yellen is expected to provide another update to Congress this week on the government's cash balance. On Sunday, Yellen indicated that her forecasts that the United States would not be able to pay all bills on time by June 1 had not changed.
"I certainly haven't changed my rating, so I think it's a tough deadline," Yellen said on NBC's "Meet the Press."
Ms. Yellen noted that the government expected to receive significant tax payments by June 15extending the so-called X-datelater in the summer. But she cautioned that the odds of getting that far were "pretty slim."
The Minister of Finance, whowarned last weekthat bankruptcy would "cause an economic and financial catastrophe", he said he was not exaggerating the seriousness of the looming crisis.
“Tough choices will have to be made if the debt ceiling is not raised,” Yellen said, explaining that if the United States ran out of money to pay all of its bills, some would have to go unpaid.
Hope had at least waned a bit in recent days. Biden's aides accused Republicans of backtracking on key points of the deal, and Republicans accused the White House of refusing to compromise on the conservatives' top priorities.
Biden on Sunday criticized Republicans for not considering raising additional tax revenues to reduce future budget deficits as part of the negotiations. He said he proposed a discretionary spending cap that would save $1 trillion over a decade compared to baseline projections.
"It's time Republicans accept that no budget deal can be made on their partisan terms alone," he said.
Rep. Jodey C. Arrington, a Texas Republican and chairman of the Budget Committee, categorically ruled out on Sunday that Republicans would accept any tax increases as part of a debt reduction deal.
"It's not on the table for discussion," Arrington said on ABC's "This Week." "Now is not the time to tax our economy or working families."
Some of the barbs negotiated by the sides appeared to be aimed at strengthening their bases. Hardline spender hawks in the House urged McCarthy to demand much larger concessions from Biden. Some progressive Democrats have pressured Biden to break off talks and instead take unilateral action to challenge the debt limit on constitutional grounds.
A clause of the 14th Amendment, passed after the Civil War, stipulates that "the validity of government debt" issued by the United States government "shall not be questioned". Some legal scholars say the border is constitutional. But others say the clause requires the government to continue issuing new debt to pay bondholders, effectively exceeding the country's legal borrowing limit, which is overseen by Congress.
The two sides reached an agreement in talks last week, which included reclaiming some unspent funds from previously passed Covid relief legislation. They also broadly agreed on some kind of cap on discretionary federal spending for at least the next two years. But they're stuck with the details of those limits, including how much to spend on discretionary programs in the next fiscal year -- and how to split that spending between the military and other programs.
The White House's latest offer would keep military and other spending — including education, scientific research and environmental protection — constant from the current fiscal year to the next fiscal year, according to a person familiar with both sides' proposals. That measure would not cut nominal spending without adjusting for inflation, which Republicans are working hard on. Questioned by a reporter on Sunday, Biden said the cuts he had proposed would not trigger a recession.
Last month, Republicans passed a bill that combined spending cuts with an increase in the debt limit would generate net savings of about $5 trillion over a decade compared to current projections.
The Republicans' latest proposal includes a nominal decrease in total discretionary spending next year. But that discount isn't evenly distributed; in his plan, military spending would continue to grow while other programs would be cut more deeply.
Biden's bid would set a two-year spending cap. Republicans would define them for six years.
Republicans also proposed several money-cutting efforts that White House officials opposed. They include new job requirements for Medicaid beneficiaries and Temporary Assistance for needy families. They would also make it more difficult for states to request exemptions from work requirements for certain federal food aid recipients who live in areas of persistently high unemployment — a proposal that was not on the Republican debt limit bill passed in the House.
Republicans also continue to push for a reduction in executive funding for the IRS, a move that the Congressional Budget Office estimates would increase the budget deficit by reducing future federal tax revenues. And they tried to include some provisions of astrict immigration lawthat recently passed through the Chamber, said a person familiar with the proposal.
“We all worry about deficits and fiscal responsibility, but deficits can be addressed by changes in spending as well as changes in revenue,” Yellen said, adding she was “deeply concerned” about Republican proposals to cut funding. .
Biden insisted on Sunday that he was willing to make cuts. He also suggested that some Republicans were trying to wreck the economy by not raising the loan limit to hurt Biden's re-election hopes.
If the nation defaulted, Biden said "I'd be innocent" on the grounds — meaning it would be the Republicans' fault. But, he said, "in the politics of it no one would be innocent."
“I think there are some MAGA Republicans in the House who know the damage this would do to the economy, and since I am the president and the president is responsible for everything, Biden would take the blame,” he said.
Alan Rappeport, Carl Hulse and Chris Cameron contributed reporting.
Jim Tankersley is a White House correspondent who focuses on economic policy. He has been writing in Washington for more than a decade about dwindling opportunities for American workers and is the author of "The Riches of This Land: The Untold, True Story of America's Middle Class." @Jim Tankersly
Catie Edmondson is a reporter in the Washington bureau covering Congress. @Catie Edmondson
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Potential repercussions of reaching the ceiling include a downgrade by credit rating agencies, increased borrowing costs for businesses and homeowners alike, and a dropoff in consumer confidence that could shock the United States' financial market and tip its economy—and the world's—into immediate recession.What is the new debt limit? ›
The Treasury Department (Treasury) ran up against its $31.4 trillion debt limit and deployed emergency borrowing authority—known as “extraordinary measures”—to continue fully financing government operations on January 19, 2023.What happens if the debt ceiling isn't raised? ›
If the debt ceiling isn't raised in time, Treasury and the White House will have to make difficult decisions about which bills to pay with the funds that are available. The US has never missed making payments on its bills before. In fact, in the last 45 years, Congress has adjusted the debt ceiling over 60 times.What happens if the US defaults on its debt? ›
U.S. debt, long viewed as ultra-safe
Its debt, long viewed as an ultra-safe asset, is a foundation of global commerce, built on decades of trust in the United States. A default could shatter the $24 trillion market for Treasury debt, cause financial markets to freeze up and ignite an international crisis.
On January 19, 2023, the United States hit its debt ceiling, leading to a debt-ceiling crisis, part of an ongoing political debate within Congress about federal government spending and the national debt that the U.S. government accrues.Who owns the most US debt? ›
Domestic Holders of Federal Debt
The Federal Reserve, which purchases and sells Treasury securities as a means to influence federal interest rates and the nation's money supply, is the largest holder of such debt.
Generally speaking, a debt-to-equity or debt-to-assets ratio below 1.0 would be seen as relatively safe, whereas ratios of 2.0 or higher would be considered risky. Some industries, such as banking, are known for having much higher debt-to-equity ratios than others.How high can the federal debt go? ›
The debt limit caps the total amount of allowable outstanding U.S. federal debt. The U.S. hit that limit—$31.4 trillion—on January 19, 2023, but the Department of the Treasury has been undertaking a set of “extraordinary measures” so that the debt limit does not yet bind.What is in the new debt ceiling deal? ›
The debt ceiling bill that House Republicans passed last month would return discretionary spending to fiscal 2022 levels and then limit the growth in spending to 1% for a decade. Defense spending would be protected.What happens if the debt gets too high? ›
Rising debt means fewer economic opportunities for Americans. Rising debt reduces business investment and slows economic growth. It also increases expectations of higher rates of inflation and erosion of confidence in the U.S. dollar.
But the process of raising the debt ceiling isn't a new one in the nation's capital. In the last 82 years, Congress has raised the debt ceiling at least a hundred times. Breaking that down by party, the debt ceiling has been raised 56 times under Republican administrations and 44 times during Democratic ones.What is the deadline for debt ceiling? ›
WASHINGTON (AP) — Treasury Secretary Janet Yellen said Friday the projected debt ceiling deadline is extended to June 5, four days later than previously estimated.Who does the US owe money to? ›
Which countries hold the most US debt? Over the past 20 years, Japan and China have owned more US Treasuries than any other foreign nation. Between 2000 and 2022, Japan grew from owning $534 billion to just over $1 trillion, while China's ownership grew from $101 billion to $855 billion.What should I do if the US defaults? ›
- Military families should keep extra cash. ...
- Expect volatility in bonds. ...
- Stick with high-quality investments. ...
- Don't over invest, despite temptation.
To pay back one million dollars, at a rate of one dollar per second, would take you 11.5 days. To pay back one billion dollars, at a rate of one dollar per second, would take you 32 years. To pay back one trillion dollars, at a rate of one dollar per second, would take you 31,688 years.Has the US ever not been in debt? ›
As a result, the U.S. actually did become debt free, for the first and only time, at the beginning of 1835 and stayed that way until 1837. It remains the only time that a major country was without debt. Jackson and his followers believed that freedom from debt was the linchpin in establishing a free republic.Why is the US in so much debt? ›
Since the government almost always spends more than it takes in via taxes and other revenue, the national debt continues to rise. To finance federal budget deficits, the U.S. government issues government bonds, known as Treasuries.Why is the US the most in debt? ›
Louis Fed shows America's debt-to-GDP ratio is about 120 percent, thanks in part to COVID-driven spending in 2020. The ratio has typically spiked at the end of America's wars. It hit 113 percent right after World War II. The modern low was around 30 percent in 1981.How much does the US owe China? ›
|Rank||Country||U.S. Treasury Holdings|
|3||🇬🇧 United Kingdom||$655B|
U.S. debt to China comes in the form of U.S. Treasuries, largely due to their safety and stability. Although there are worries about China selling off U.S. debt, which would hamper economic growth, doing so in large amounts poses risks for China as well, making it unlikely to happen.
China's debt is nearly 44% of its GDP and its local governments owe nearly $5.14 trillion. With the economic slowdown and collapse of land sales revenue, provinces and local governments in China are facing an embarrassing situation.What is worse than being in debt? ›
Worse than being in debt is losing your peace.
It's called being human. For some people that adversity takes the form of being in debt. The main thing is to keep your peace, to know that God is taking care of each of us, and to remember to trust Him to provide.
If your total balance is more than 30% of the total credit limit, you may be in too much debt. Some experts consider it best to keep credit utilization between 1% and 10%, while anything between 11% and 30% is typically considered good.What is a good income to debt? ›
35% or less: Looking Good - Relative to your income, your debt is at a manageable level. You most likely have money left over for saving or spending after you've paid your bills. Lenders generally view a lower DTI as favorable.Is China in debt to the US? ›
China and Japan are the largest foreign investors in American government debt. Together they own $2 trillion — more than a quarter — of the $7.6 trillion in US Treasury securities held by foreign countries.How much debt does the average American have? ›
Average American household debt statistics
The average American holds a debt balance of $96,371, according to 2021 Experian data, the latest data available.
The best example can be taken from Hong Kong (it is a one of the debt free countries), whose economy has the least debt to GDP ratio. It is an almost debt free country. It has a well-regulated financial system and large foreign reserves.Can you go to jail for owing too much debt? ›
You can't be arrested for debt just because you're behind on payments. No creditor of consumer debt — including credit cards, medical debt, a payday loan, mortgage or student loans — can force you to be arrested, jailed or put in any kind of court-ordered community service.What should I do if I have too much debt? ›
- Analyze your situation. ...
- Consider bankruptcy. ...
- Consider going to a credit counseling service. ...
- Prioritize the debt you need to pay. ...
- Talk to your credit card issuers. ...
- Pay off the debt with the higher interest first. ...
- Or – pay off smaller debts first. ...
- Transfer your credit card balance.
The average U.S. household has $6,473 in credit card debt
Many Americans use credit cards to pay for purchases, and it turns out many have outstanding account balances.
Nearly every year, the government spends more than it collects in taxes and other revenue, resulting in a deficit. (The debt ceiling, set by Congress, caps how much the U.S. can borrow to pay for its remaining bills.) The national debt, now at a historic high, is the buildup of its deficits over time.What countries have a debt ceiling? ›
Several countries have debt limitation laws in place. Only Denmark and the United States have a debt ceiling that is set at an absolute amount rather than a percentage of GDP. The US Congress began using the measure in 1917 and modified the financing law in 1939 to give the treasury more flexibility in issuing debt.Has the debt ceiling ever been suspended? ›
The ceiling was suspended three times: from September 30, 2017, to December 8, 2017; from December 8, 2017 to March 1, 2019; and, after concerns were raised from Treasury in July 2019 of an unexpected shortfall due to reduced tax receipts under Trump's tax legislation, from August 2, 2019 to July 31, 2021.Has the debt ceiling ever been reduced? ›
The debt ceiling was raised 74 times from March 1962 to May 2011, including 18 times under Ronald Reagan, eight times under Bill Clinton, and seven times under George W. Bush. In practice, the debt ceiling has never been reduced, even though the public debt itself may have reduced.Does China have more debt than the US? ›
The United States, holding the highest national debt globally, has a total of $31.68 trillion, representing a YoY increase of $1.3 trillion or 4.28%, reaching $30.38 trillion. Therefore, China's national debt has surged almost three times that of the United States in the past 12 months.Which country has the highest debt? ›
Japan's debt-to-GDP ratio is the highest in the world due to a prolonged period of economic stagnation and demographic challenges.How much money does the US owe to itself? ›
Nearly all of that debt – about $31.38 trillion – is subject to the statutory debt limit, leaving just $25 million in unused borrowing capacity. For several years, the nation's debt has been bigger than its gross domestic product, which was $26.13 trillion in the fourth quarter of 2022.How do I prepare for a US debt default? ›
- Build an emergency fund. ...
- Reduce debt. ...
- Wait to buy a home. ...
- Diversify your investments but don't overdo it. ...
- Review and adjust financial plans.
Unless there is an increase in economic activity commensurate with the amount of money that is created, printing money to pay off the debt would make inflation worse. This would be, as the saying goes, "too much money chasing too few goods."What is the highest debt the US has ever had? ›
Total US federal government debt breached $30 trillion mark for the first time in history in February 2022. As of February 2023, total federal debt was $31.5 trillion; $24.6 trillion held by the public and $6.9 trillion in intragovernmental debt.
The case of debts arising from World War II is somewhat less complicated. At this time only four countries, discussed below, owe the U.S. government debts of any size arising from World War II programs to aid our allies. Other countries have paid their debts in full.Why does the US owe Japan so much money? ›
Japan is the second-largest foreign holder of U. S. debt after China, with holdings totaling nearly $1. 3 trillion in September 2020. Japan's large holdings of U. S. debt can be attributed to Japan's large trade surplus, low-interest rates, and limited investment opportunities in their own domestic markets.How much money does France owe the United States? ›
|French obligations received by U. S. treasury under Liberty Loan acts||$2,997,477,800.00|
|Bonds received by Secretary of War in payment for surplus war supplies||407,341,145.01|
|(interest on war-surplus bonds has been regularly paid)|