Home Economy Biden and Republicans start far apart in debt limit talks

Biden and Republicans start far apart in debt limit talks

by SuperiorInvest

President Biden is set to welcome Chairman Kevin McCarthy and other top congressional leaders to the White House on Tuesday. key round of discussions on the nation’s taxes, spending and debt as a potentially catastrophic government failure fast approaches.

The negotiations are just weeks away from the United States money is expected to run out to pay their bills unless the government loan is cancelled. As in previous moments of failure, the discussions have echoes of 2011 and 2013, when Republicans in Congress refused to raise the debt ceiling unless a Democratic president agreed to curb federal spending and reduce budget deficits. The same dynamic is at play now, but with a crucial difference: The parties share almost no common ground on tax and spending proposals designed to reduce the growth of the national economy. $31.4 trillion in debt.

The meeting is not expected to produce anything close to a final deal on a fiscal plan that could include raising the debt limit. But even small points of agreement can be hard to come by.

Mr. Biden wants to expand federal spending and reduce future debt, largely by tax increases for high earners and large corporations. Republicans have the bill passed cut federal discretionary spending — a category that includes national parks, education and others — and repeal tax credits for certain low-emission energy sources that were part of Mr. Biden’s climate signature. Republicans have promised to extend the 2017 tax cuts passed by President Donald J. Trump that expire at the end of 2025.

While both sides say they want to reduce the nation’s future debt burden, there is almost no overlap in how they want to achieve that outcome. The only point of agreement so far is the one thing Mr. Biden and Mr. McCarthy see as limits in budget talks: Social Security and Health Care, the primary sources of projected growth in federal spending in coming decades.

The fiscal gap is one of several complicating factors in the debate over the debt limit, which the government technically hit earlier this year. Officials are essentially using accounting maneuvers to pay all government bills on time without exceeding the current $31.4 trillion cap. But Janet L. Yellen, the Treasury secretary, warned in a letter last week that the effort would no longer be possible. immediately on June 1Risking a debt default that economists warn could cause a financial crisis and recession.

Mr. Biden has refused to negotiate directly on the cap, saying Republicans must vote to raise it without conditions because it simply allows the government to pay for spending that lawmakers of both parties have already approved. But he invited Mr. McCarthy and other congressional officials to come to the White House on Tuesday for what he called a separate negotiation on fiscal policy — even though it is effectively tied to the debt ceiling drama.

Republicans say they won’t raise the cap without significant spending cuts. This is the same position they took in 2011 and 2013 under President Barack Obama, when Mr. Biden was vice president. They didn’t make similar demands to raise the cap when they controlled Congress early in Trump’s term, and Republican votes helped effectively raise the cap.

In 2011, Mr. Obama entered the debt ceiling negotiations a set of proposed spending cuts. They included a five-year freeze on discretionary spending unrelated to national security, a separate freeze on federal worker pay for two years, and the cancellation of the air-to-air missile program and the Marine Corps Combat Vehicle. Republicans countered with the budget which featured deep cuts in federal health care spending, privatization of Medicare for future beneficiaries, and new tax cuts.

Republicans eventually agreed to raise the debt limit in exchange for budget changes focused on caps on discretionary spending — essentially modifying and expanding the spending freeze that Mr. Obama proposed in his budget.

Unlike Mr. Obama more than a decade ago, Mr. Biden has never accepted the Republican argument that federal spending has grown too much. He has proposed limiting the growth of government debt, but his aides reject Republican claims that the current debt trajectory poses a significant threat to economic growth.

Mr. Biden’s latest budget included $3 trillion in proposals reduce future deficits. The savings would come largely from raising taxes on the wealthy and large corporations, along with reducing government health care spending by expanding Medicare’s ability to negotiate prescription drug prices.

Republicans have rejected all tax increases and criticized Mr. Biden earlier this year for not proposing to spend even more on the military than he already has.

House Republicans have not introduced or passed a budget. The bill they passed last month would raise the debt limit by $1.5 trillion or until March 2024, whichever comes first. It would reduce future deficits by nearly $5 trillion, largely by freezing certain federal spending for a decade, according to the nonpartisan Congressional Budget Office.

It also included new support for fossil fuels, repealing Mr. Biden’s climate change agenda and ending the president’s attempt to cancel student loan debt for most borrowers, which It seems likely to be overturned by the Supreme Court regardless.

Neither side found anything to like in the other’s starting position. Republicans “didn’t make a budget,” Representative Hakeem Jeffries of New York, the Democratic leader who will join Mr. McCarthy at the White House meeting, told NBC News on Sunday. “What they did was release the ransom.

Appropriations Committee Chairman Jodey C. Arrington of Texas countered that Mr. Biden would have to back down and negotiate with Republicans.

Mr. Biden “negotiated as vice president and as a senator to raise the debt ceiling with sensible spending controls and fiscal reforms,” ​​Arrington told Fox News on Sunday. “And we’re just asking him to be a responsible leader and do it again.

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