What a day! President Joe Biden met this afternoon with the “Big Four” congressional leaders, including House Speaker Kevin McCarthy, to discuss the debt limit. And shortly before that a Manhattan jury found Donald Trump liable for sexually abusing and defaming writer E. Jean Carroll and awarded her $5 million in damages in a civil case that could affect the former president’s bid to win another term. Trump called the verdict a “total disgrace” and a “continuation of the greatest witch hunt of all time.”
Here's an update on the White House talks.
White House Debt Meeting Yields No Movement: McCarthy
There was no unexpected breakthrough.
Republican leaders emerged from a White House meeting with President Joe Biden to discuss the need to raise the debt limit signaling that little had changed after their roughly hour-long session — but that staff members would continue to talk and that leaders will hold another meeting on Friday.
"Everybody in this meeting reiterated the positions" they had going in, House Speaker Kevin McCarthy said afterward. "I didn't see any new movement."
McCarthy slammed Biden repeatedly in talking to reporters after the meeting, arguing that the president has wasted 97 days since February 1, when they last met on the debt. Asked whether he saw any progress coming out of the meeting, McCarthy said just the fact that they met was a positive change.
Senate Minority Leader Mitch McConnell insisted that any solution to the standoff should be negotiated by the president and the speaker. “There is no sentiment in the Senate — certainly not 60 votes, for a clean debt ceiling — so there must be an agreement, and the sooner the president and the speaker can reach an agreement, the sooner we can solve the problem,” he said.
McConnell insisted though that default is not an option. “The United States is not going to default. It never has and it never will,” he said.
McCarthy would not go quite as far. “I’ve done everything in my power to make sure we will not default,” he said, noting that the House had passed a bill to raise the debt limit.
The White House had said prior to the meeting that Biden would insist that a “clean” increase in the debt limit is the only path to resolving the stalemate.
“I mean, people have asked, ‘Will the President give Speaker McCarthy an off-ramp, an exit strategy?’ The exit strategy is very, very clear—do your job, Congress must act to prevent a default,” White House Press Secretary Karine Jean-Pierre said. And National Economic Council Deputy Director Bharat Ramamurti told CNN on Monday that “there is no plan B.”
The White House has also escalated its rhetoric in recent days, warning, for example, that the spending cuts in the House Republican plan would “supercharge the fentanyl crisis” by slashing law enforcement agents. Biden is also expected to hammer the GOP negotiating position at a Wednesday event in New York’s Hudson Valley, in a congressional district he won in 2020 that is now represented by Republican Rep. Mike Lawler, who won his seat in a close race. The White House has said the president “will discuss why Congress must avoid default immediately and without conditions, and how the House Republican Default on America Act will cut veterans’ health care visits, teachers and school support staffs, and Meals on Wheels for seniors.”
The two sides apparently agree on two things: Neither wants a short-term extension of the debt limit (though they have not necessarily ruled it out completely) and both argue that can this whole mess be settled quickly if only the other side capitulates.
“This can be easily resolved,” Jean-Pierre told reporters. “This is a man-made crisis that the speaker is leading.”
McCarthy similarly dismissed the idea of an agreement to reset the deadline to the end of the fiscal year on September 30. “Why continue to kick the can down the road?” McCarthy told reporters at the Capitol. “Let’s solve it now.”
The speaker said earlier in the day that a deal would be needed by next week if lawmakers are to raise the ceiling in time to meet a possible June 1 deadline.
Punchbowl News, seen as having good access to the speaker, reports that “What McCarthy is truly aiming for is a deal that puts spending caps in place and cuts spending year over year. He also wants permitting reform, which the White House has been open to in the past. It will be up to McCarthy to sell a deal like this to House Republicans — if it happens.”
The bottom line: McCarthy and Biden are flirting with disaster, but they may have to get to the brink of a catastrophic failure before they can find some path forward.
US Could Run Out of Cash in Just a Few Weeks: Analysis
Already deploying what it calls extraordinary measures to keep paying its bills after bumping up against the debt ceiling in January, the U.S. Treasury could run out of cash as soon as early June, according to a new analysis by the Bipartisan Policy Center.
The non-partisan group on Tuesday updated its estimate of when the X-date could arrive, saying that it is “most likely to occur between early June and early August of 2023.” The estimate is in line with the one provided last week by Treasury Secretary Janet Yellen, who warned Congress that the U.S. could run out of cash by June 1.
Shai Akabas, director of economic policy at BPC, said that while he cannot define a particular day that the X-date will occur, he has “significant concern” that it could arrive in early June. “I still don't think now is the time for panic, but it's certainly time to start getting concerned because we're possibly only weeks away from the X-date,” Akabas told CBS News.
BPC said that the showdown over raising the debt limit is already generating economic costs. “On May 4, 2023, Treasury sold $50 billion of four-week securities scheduled to mature on June 6 at a record 5.84%—the highest yield for any Treasury bill auction since 2000—demonstrating an aversion among investors to hold debt maturing around the X Date,” the group said.
BPC’s Michael Thorning also noted that time may not allow for a parliamentary maneuver called a discharge petition that House Democrats hope to have as a fallback option in the event that the White House and Congress cannot agree on a plan to raise the debt ceiling.
“The process set forth in House rules includes multiple layover periods which will conflict with the House's scheduled work period beginning May 26 and ending June 4,” Thorning wrote. “Consequently, even if Democrats can recruit the necessary five Republican signatures for the discharge petition, by the time the process comes to a head, it will be too late to avoid default if June 1 is the deadline. At the earliest, the discharge process could be completed sometime between June 5 and June 7.”
Number of the Day: 17.7%
Tax revenues surged in 2022 on the heels of a booming economy, hitting a near-record 19.6% of GDP. But they’ve dropped back closer to their historical norm this year, according to an analysis by the Committee for a Responsible Federal Budget. Tax revenues have now fallen to 17.7% as a share of the economy, just three-tenths of a percentage point above their 50-year average. “Receipts this April were particularly weak, coming in $225 billion, or 26 percent, below last year's levels,” CRFB says.
Another $1.2 Billion in Military Aid for Ukraine
The Biden administration announced on Tuesday that it is providing a new military assistance package to Ukraine worth $1.2 billion. The aid will be provided through the Ukraine Security Assistance Initiative, an $18 billion fund that pays manufacturers and allies directly for arms and equipment rather than drawing from existing Pentagon stocks. About $11 billion of that fund has already been spent, Defense One reports.
The Department of Defense said the aid package will include air defense systems, 155mm artillery rounds, and support for training and maintenance. With this latest package the U.S. has now provided nearly $37 billion in military aid to Ukraine since Russia invaded the country last year.
- McCarthy Sees No ‘Movement’ on Debt Ceiling After Meeting With Biden – Washington Post
- White House, McCarthy Disavow Short Debt-Limit Extension – Bloomberg
- Here’s Who Misses Checks if the U.S. Hits the Debt Brink in June – Politico
- Senate GOP Leaders Watch Debt Limit Collide With Their Coveted Farm Bill – Politico
- US to Provide Ukraine $1.2 Billion in Long-Term Security Aid – Associated Press
- Funding Woes at the Education Dept. Threaten Federal Student Aid Agenda – Washington Post
- Blue States Put the Brakes on Health Care for Undocumented Immigrants – Politico
- End of Covid Emergency Highlights U.S. Weakness in Tracking Outbreaks – Washington Post
- Jerome Powell Faces Lowest Public Confidence for Fed Chairman on Record, Gallup Says – Bloomberg
- TurboTax Is Sending Checks to 4.4 Million Customers as Part of a $141 Million Settlement – CNN Business
- Gallup: Americans Are Not Confident in Their Leaders’ Ability to Handle the Economy – Semafor
Views and Analysis
- This Is What Would Happen if Biden Ignores the Debt Ceiling and Calls McCarthy’s Bluff – Robert Hockett, New York Times
- Are Republicans Willing to Raise the Debt Ceiling? – New York Times Editorial Board
- GOP Should Yield on the Debt Ceiling – William A. Galston, Wall Street Journal
- McCarthy-Biden Showdown Is About Much More Than the US National Debt – Stephen Collinson, CNN
- Past Debt Ceiling Debates Carved Up Federal Spending and Derailed a Presidency – Jacob Bogage, Washington Post
- What If Republicans Actually Want a Debt Disaster? – Ed Kilgore, New York
- The Cowardice of the Deficit Scolds – Paul Krugman, New York Times
- The Crypto-Reactionary Deficit Scolds – Ryan Cooper, American Prospect
- How America’s Debt Problem Compares to Other Countries—and Why It Matters – William McBride, Tax Foundation