WASHINGTON (NewsNation) — President Joe Biden and House Speaker Kevin McCarthy are set to meet with other members of the congressional “Big Four,” at the White House on May 9.
This comes as Biden and McCarthy have less than 30 days to ease a debt limit standoff and Treasury Secretary Janet Yellen said the federal government might be unable to pay its bills as soon as June 1.
Biden and McCarthy haven’t sat down since February, but will be joined by House Democratic Leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and House Republican Leader Mitch McConnell to discuss their impasse.
Biden plans to stress that Congress must take action to avoid default without conditions, a White House official told NewsNation. He also plans to discuss the urgency of preventing default, as well as how to initiate a separate process to address the budget and fiscal year 2024 appropriations, the official said.
Biden is still standing his ground to not negotiate the spending cuts that Republicans want. The president has called for a “clean” increase to the $31.4 trillion cap, while McCarthy and GOP leaders are demanding spending cuts in return and passed a bill with $4.8 trillion in deficit savings over 10 years last week.
McCarthy issued a statement stating, “President Biden has refused to do his job — threatening to bumble our nation into its first-ever default — and the clock is ticking.”
House Republicans voted last week to pass their plan that would cleave discretionary spending over the next decade in return for increasing the debt limit by $1.5 trillion or until March 31, 2024, possibly setting up another showdown going into that year’s presidential election.
After three months of the Biden administration’s inaction, the House acted, and there’s currently a bill sitting in the Senate that would put the risk of default to rest.
McCarthy punted it to Democrats in control in the Senate and Biden.
In January, Yellen anticipated the date would be June 5. However, weak tax collections are driving up the deadline, as the country is running out of money to pay its bills.
It’s still unclear how the president and Congress can resolve the matter, yet Democratic leaders want to decouple the debt limit from the budget process.
While lawmakers don’t want the U.S. to default, as there would be catastrophic consequences and it is still unlikely to happen, if it does the implications would be brutal and wide-ranging.
A think tank predicts the U.S. could lose three million jobs, undoing nine months of employment growth. For example, a typical worker near retirement with 401K savings could lose $20,000.
Inflation would go up and it would be harder to borrow money for just about anything. The average new 30-year mortgage would cost an extra $130,000.
Some economists have even said it would be worse than the 2008 financial crisis.
In 2011, the S&P downgraded the credit rating of the United States because it came close to defaulting. If that happened again, it could result in an increase in interest rates to finance U.S. debt.