Members and supporters of the Writers Guild of America form a picket line in New York on Tuesday. The strike began on May 3 as writers demanded better pay. ALEX KENT/GETTY IMAGES
Democrats and Republicans are controversial about their political positions
Editor’s note: With a critical deadline approaching in the United States, Democrats and Republicans are at odds over the debt ceiling. This page is about the current state of affairs and the economic consequences.
The US government is stoking global economic fears as it faces a renewed standoff over raising the debt ceiling as a deadline approaches. The country’s two main political parties are trading allegations as time runs out to avert a potentially catastrophic US default.
President Joe Biden on Sunday called Republicans’ calls for a resolution to the government’s debt ceiling standoff “unacceptable” and said Republicans are taking their “extreme positions” on now-stalled talks to raise the debt ceiling from 31.4 trillions of dollars would have to give up. Biden planned to call House Speaker Kevin McCarthy from Air Force One on his way back to Washington after a Group of Seven summit in Hiroshima, Japan.
According to a White House official, Biden’s negotiating team briefed him on the status of talks, which broke down on Friday with no sign of progress.
The US Treasury Department has warned that the federal government may not be able to pay all of its debts by June 1. This would trigger a default that could wreak havoc on the financial markets and drive up interest rates.
The officials did not meet on Saturday and did not announce progress at their meetings on Friday or schedule renewed talks. Instead, both sides felt the other’s proposals were too extreme.
White House press secretary Karine Jean-Pierre said Biden and McCarthy agreed that any budget agreement must be bipartisan and accused Republicans of pushing proposals too far to the right to pass Congress.
Late Saturday afternoon, McCarthy said he didn’t think talks could move forward until Biden was back in the country. He accused the Democrats of taking too extreme a stance on the left.
The White House indicated earlier Saturday that Republicans were negotiating in bad faith.
“Stay tuned” summed up the situation — at least stay tuned until Biden returns to Washington from the G7 summit on Sunday.
Despite the collapse of the talks, Biden told reporters in Japan on Saturday that he was “not at all” concerned about the talks. They tend to take it incrementally, and “I still think we can avoid a default,” he said.
Biden had said an agreement would need to be reached this weekend to get the legislation straight by June 1. The debt ceiling is the legal limit for government debt – it currently stands at $31.4 trillion – and was reached in January.
If there is no agreement, not raising the debt limit could lead to the first US default. Economists have warned that failure to pay critical payments such as military salaries, Social Security benefits or interest on previously issued debt could plunge the country into an unprecedented default and impact the global economy.
The Washington Post reported Saturday that Republican negotiators had rejected an offer from the White House to limit spending on the military and a variety of key domestic programs over the next year, according to three people familiar with the matter, who spoke on condition of anonymity .
Instead, Republicans are pushing for higher defense spending and deeper domestic spending cuts, the people said.
During the talks, Biden officials made what they saw as an important concession by proposing that Congress should keep spending broadly constant on a variety of domestic programs, including education, scientific research and housing assistance.
Biden’s negotiators also suggested leaving military spending essentially unchanged for next year. Biden’s budget earlier this year saw big increases for both, funded by higher taxes. Holding their funding constant would equate to a cut of up to 5 percent year-over-year due to inflation.
On Friday, McCarthy and negotiators said spending levels were a key sticking point.
In a statement to Fox Business on Saturday, McCarthy said he had “been very clear about where we need to go. All we’re saying is spend less.” He added, “I think we could probably find a pretty good deal to move forward, but the White House isn’t going to budge.”
McCarthy has pushed for cuts that would remove $100 billion from agency budgets and a decade of spending ceiling restrictions.
Democrats want the spending cuts to last for about two years, after which appropriators could more easily increase the budget.
“It’s always been a problem,” G. William Hoagland, senior vice president of the Bipartisan Policy Center, a Washington think tank, told the Washington Post. “Republicans are targeting significant savings over the next decade, while the administration is clearly not committing to 10-year numbers and is looking at a much shorter timeframe.”
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