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The drop-dead date for raising the debt ceiling is fast approaching. Negotiations not so much.

Biden Summons Congressional Leaders to White House Meeting

The debt ceiling doomsday clock striking June 1 prompted President Biden to invite lawmakers to meet. Whether they negotiate at the meeting is another question.

Treasury Secretary Jane Yellen’s warning the United States could hit the debt ceiling sooner than previously anticipated prompted Biden to invite the four congressional leaders, including House Speaker Kevin McCarthy, to the White House May 9. McCarthy has accepted.

Biden continues to says he won’t negotiate on raising the debt ceiling, which is necessary to cover discretionary and non-discretionary expenditures already approved by Congress. Republicans are pushing for spending rollbacks and cuts to lower future deficit spending

The White House get-together is delayed because McCarthy is in the Middle East this week and Biden is scheduled to attend the Group of 7 summit in Japan, then travel to Australia for a summit with the leaders of Japan, India and Australia.

At the Core of the Dispute
Congressional Republicans put the onus to negotiate a path to raise the debt ceiling on Biden. Democratic leaders believe the first step is clean passage of a debt ceiling increase. Outside voices tend to agree with Democrats. “We need to raise the debt limit as soon as possible, without drama and without serious risk of default,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

Part of the problem is knowing where to start negotiations. Biden wants a clean bill. House Republicans narrowly passed legislation that makes wholesale cuts and reverses Biden-backed spending and regulatory priorities in return for a one-year debt ceiling increase. There isn’t an obvious middle ground between those two positions.

Maine Congressman Jared Golden – a Democrat representing a Republican district – anticipated the stalemate, did his homework and came up with a concept that would require $250 billion in spending cuts each of the next two years coupled with $250 billion in additional tax revenue. As rational as the plan may be, it would require Democrats to back spending cuts and Republicans to vote for tax hikes.

To add to the trapeze act, Biden has just announced his re-election bid in 2024 and McCarthy appears on the edge of holding together his fractious, thin House GOP majority. It’s a contemporary version of political chicken. Interestingly, Biden’s likely 2024 rival, Donald Trump, Is in Scotland dedicating a new golf course.

It will probably take third-party forces, like already spooked financial markets, to get the parties to engage in serious negotiations. Even external forces may find it hard to identify the engagement sweet spot. Biden and his congressional supporters don’t want to give in to what they view as political blackmail. McCarthy doesn’t have the wiggle room with his right-leaning GOP caucus to deal. It would be political suicide for McCarthy to agree to a plan that requires House Democrats to pass.

A more dramatic option would involve Biden declaring the debt ceiling unconstitutional.

Alternatives to Negotiation
House Democrats launched an effort to use a discharge petition to pull a clean debt ceiling measure from committee to the floor for a vote. To be successful, Democrats would need all of their 212 conference members plus a handful of Republicans to join them. Four Republicans voted against the McCarthy spending reduction bill, but they are far-right conservatives who thought the House measure didn’t go far enough and wouldn’t likely join a Democratic-backed discharge petition.

Democrats cannot begin collecting signatures for the discharge petition until May 16, which means it would a tightrope strategy even if successful. Some leaders privately admit there is no realistic congressional strategy to pass a clean debt ceiling increase.

That leaves only the pull-the-rabbit-from-the-hat strategies, such as Treasury minting a $1 billion coin. Treasury has the legal authority to mint coins of any denomination. Treasury Secretary Janet Yellen has pooh-poohed this strategy as a gimmick.

A more dramatic option would involve Biden declaring the debt ceiling unconstitutional, citing a Civil War-era provision in the Fourteenth Amendment that says the United States must pay its bills. Former President Bill Clinton said in retrospect he would have used this approach to break a debt ceiling stalemate. In a similar stand-off in 2011, President Obama chose to negotiate with congressional Republicans.

This option may appeal to Biden because It’s definitive, even assuming legal challenges, and would negate the need for negotiations, his priority. As a candidate running for re-election next year, Biden could tout how he acted decisively to thwart deep spending cuts proposed by Republicans. He also could avoid running the same political gauntlet next year to secure another debt ceiling increase.

It’s inevitable the Biden administration will need to engage in budget talks with House Republicans. Appropriations tend to break down partisan boundaries when lawmakers discuss spending that benefits their home districts. Congress has perfected the Continuing Resolution process to keep the wheels of government running despite gridlock over spending level or specific spending measures.