Biden and Republicans fail to agree on debt ceiling

Negotiations between Republicans and the administration of President Joe Biden to increase the national debt ceiling have stalled. On May 21, the press secretary of the White House, Karine Jean-Pierre, made a corresponding statement. According to her, the demands of the Republican Party, as set out by Speaker of the House of Representatives Kevin McCarthy, “thrown back” negotiations on the national debt. “The speaker’s team presented proposals that were a big step back and contained a set of extreme one-party demands that could never be passed by both houses of Congress. Only the Republican leadership, indebted to its wing MAGA (Make America Great Again, a group of right-wing radical Republicans. – Vedomosti), and not the president or the Democratic leadership, threatens to lead our country to default for the first time in our history if radical one-party demands are not met, ” Jean-Pierre emphasized.

As the White House press secretary noted, Biden has repeatedly offered Republicans more moderate ways to raise the national debt ceiling. Among the president’s initiatives were, for example, cutting the profits of large pharmaceutical companies and closing tax loopholes for oil and gas enterprises. In addition, Biden agreed to limit government spending, which the Republicans had previously demanded of him. However, no compromise could be reached. The White House, Jean-Pierre added, remains open to dialogue and is ready to discuss raising the ceiling with congressmen at any time.

The positions of Republicans and Democrats regarding the national debt ceiling do not agree on a number of important issues, such as unemployment benefits, tax increases and limiting government spending. Republicans are demanding tougher requirements for the issuance of benefits, which does not suit Democrats, who do not want to expose low-income citizens to a blow. In addition, the Republicans intend to introduce restrictions on government spending for a period of 10 years. The maximum term Democrats agree to is only two years. In turn, the Republicans rejected proposals by Biden’s associates to increase taxes on the rich, as well as tax the oil and pharmaceutical industries.

In case it fails to reach an agreement with the Republicans, Biden has another possible solution – to challenge the constitutionality of the national debt ceiling by using the 14th amendment to the constitution. It obliges the US to pay its debt obligations, as a result, the government will be able to remove the ceiling and issue more bonds. Nevertheless, such a maneuver will already lead to a political clash with the Republicans and disputes over the powers of the executive branch.

According to The Washington Post (WP) newspaper, Biden believes in his ability to achieve the removal of the ceiling in this way, but is not sure that he will have time to do it before June 1, when the US will have to default on the national debt. “I believe that we have such powers. The question is whether we will be able to use them in time, ”the WP quotes the American leader. It is noteworthy that earlier at the G-7 summit, Biden refused to give foreign partners guarantees that the United States would not default. According to him, he is not responsible for the Republicans, who can do something out of the ordinary and bring down the US economy. If this happens, the whole world will suffer a serious financial crisis, adds WP.

The ceiling of the US national debt, reached at the beginning of 2023, approved by Congress, is $31.4 trillion. The administration plans to raise it by about $500 billion.

The current situation with the US public debt is really becoming serious, said Vladimir Vasiliev, chief researcher at the Institute for the US and Canadian Studies of the Russian Academy of Sciences. Both sides are standing their ground, trying to achieve maximum benefits before the presidential elections are already imminent. Democrats prefer to raise the debt ceiling without obligations, which opens up the possibility for them to spend large amounts of money to ensure the success of their campaign. For Republicans, the expert continues, it is fundamentally important to leave the Democrats without money and thus weaken their position.

According to Vasiliev, a compromise is now possible rather on the terms of the Republicans. The deal won’t be good for the Democrats, and yet it looks like the administration is ready to back down. If this does not happen, then we should expect either a technical default or the activation of the 14th amendment and the transition of the financial crisis into a political one. The expert explains that the use of the 14th amendment will allow Biden to move Congress away from the problem of public debt and take full economic power. This will entail a constitutional crisis, because the House of Representatives is vested with the right to discuss the most important budgetary and economic issues. As a result of such a decision, Vasilyev says, a serious political escalation is possible, up to the impeachment of Biden.