Biden Says He Has Authority to Challenge Debt Limit, but No Time

Biden Says He Has Authority to Challenge Debt Limit, but No Time

President Biden said Sunday he believes he has authority to challenge the constitutionality of the country’s borrowing limit but doesn’t believe such a challenge could succeed in time to prevent a federal debt default if lawmakers don’t raise the limit soon .

“I think we have the authority,” Mr. Biden said at a press conference following the Group of 7 summit in Hiroshima, Japan. “The question is whether it can be done in time and claimed.”

Mr. Biden added that once the current crisis is resolved, he hopes to “find a rationale and take it to court” to decide whether the debt limit violates a clause in the 14th amendment that says the United States have to pay their debts. He also said that in meetings with world leaders, he has failed to reassure them that America would not default on its debt – an event economists say could trigger a financial crisis that could endanger the would capture the whole world.

“I can’t guarantee they won’t force a default by doing something outrageous,” Mr. Biden said, referring to Republicans in Congress who have insisted on severe federal spending cuts in exchange for a borrowing limit hike.

Mr Biden and Spokesman Kevin McCarthy are negotiating a fiscal package that would include raising that credit limit. They remain far apart on important issues, including caps on federal spending, new job requirements for some recipients of federal anti-poverty assistance, and funding to help the IRS crack down on high earners and tax evaders.

The two men were scheduled to speak by phone shortly after Sunday’s news conference, when Biden returned to Washington in hopes of getting stalled talks back on track. The call comes on the heels of a weekend in which Republican leaders and White House officials exchanged otherworldly allegations – punctuated by Mr Biden’s attacks on Republicans in the press conference.

Treasury Department officials believe it will be just over two weeks before the federal government could lose its ability to pay its bills on time, which could result in a default. Both Mr. Biden and Mr. McCarthy late last week expressed increasing optimism that they could reach an agreement that would pave the way for Congress to raise the borrowing limit while cutting some federal spending that Republicans have insisted on as a condition of any debt -Limit increase.

“The difficulty is that nothing was agreed at all,” McCarthy said on Fox News’ Sunday Morning Futures. “With all the discussions we’ve had before, I felt like we were at a point where we could collectively agree that we would find a compromise.”

Instead, McCarthy claimed, “the President is going abroad and now he wants to change the debate.”

Treasury Secretary Janet L. Yellen is expected to provide Congress with another update on the federal treasury balance sometime this week. On Sunday, Ms Yellen pointed out that her predictions that the United States might not be able to pay all of her bills on time from June 1 had changed.

“I certainly haven’t changed my assessment, so I think that’s a tough deadline,” Ms Yellen said on NBC’s Meet the Press.

Ms Yellen pointed out that the government expects significant tax payments on June 15, which could extend the so-called X-date later into the summer. However, she warned that getting to that date would be very difficult and the chances of making it that far were “pretty slim”.

The finance minister, who warned last week that a default “would trigger an economic and financial catastrophe”, said she was not exaggerating the seriousness of the looming crisis.

“If the debt ceiling doesn’t go up, there will be tough decisions to make,” Ms Yellen said, explaining that if the United States ran out of money to pay all of its bills, some of them would have to go unpaid.

Hopes have at least faded slightly in the last 48 hours. Biden’s advisers accused Republicans of backsliding on key negotiating areas, and Republicans accused the White House of not moving on top conservative priorities.

Mr. Biden on Sunday criticized Republicans for not considering increasing additional tax revenues to reduce future budget deficits as part of the negotiations. He said he proposed a discretionary spending cap that would save $1 trillion over a decade compared to baseline projections.

“It’s time Republicans accepted that there is no budget deal that can be made solely on the basis of their partisan terms,” ​​he said.

Rep. Jodey C. Arrington, a Texas Republican who chairs the Budget Committee, flatly ruled out Sunday that Republicans would accept tax increases as part of a debt-limit agreement despite the president’s push.

“It’s not up for discussion,” Mr Arrington said on ABC’s This Week. “This is not the time to tax our economy or taxing working families.”

On the same show, Senator Chris Van Hollen, a Maryland Democrat, said that given the state of the negotiations, he believes it is time to focus on promoting a dismissal motion in the House of Representatives to give Democrats the opportunity to use help from a measure to get a handful of Republicans to have their say.

“I’m very concerned about where we are now,” said Mr. Van Hollen, noting that the petition would only require five Republicans to join 213 Democrats to force a vote. “It seems to me that we need to move in that direction soon.”

Some of the contradictions exchanged by the parties seemed intended to strengthen their bases. Hardliners in the House of Representatives have pushed McCarthy to demand far greater concessions from Biden. Some progressive Democrats have urged Mr. Biden to abandon negotiations and instead move unilaterally to challenge the debt ceiling on constitutional grounds.

A clause in the 14th Amendment, passed after the Civil War, states that “the validity of the national debt issued by the US government” “shall not be questioned.” Some legal scholars consider the limit to be constitutional. Others, however, claim that the clause requires the government to continue issuing new debt to pay bondholders, effectively overriding the country’s statutory borrowing limit, which is controlled by Congress.

Senator Bill Cassidy, a Louisiana Republican, said using the 14th amendment would be an overstatement.

“It’s another example of the President taking the House of Representatives’ constitutional authority over spending and trying to sort of consolidate it in the White House,” he said on CNN’s State of the Union.

The two sides have reached some agreement in talks over the past week, including on recovering unspent funds from previously approved Covid relief legislation. They’ve also broadly agreed on some sort of cap on discretionary federal spending for at least the next two years. But they’re hanging on to the specifics of those caps, including how much total to spend on discretionary programs over the next fiscal year — and how that spending should be divided between the military and other programs.

According to a person familiar with both sides’ proposals, the White House’s latest offer would keep both military spending and other spending — including education, scientific research and environmental protection — constant from the current fiscal year to the next. The move would not reduce nominal spending without adjusting for inflation, something Republicans are keen to push. When asked by a reporter on Sunday, Mr Biden said the spending cut he was proposing would not trigger a recession.

A bill Republicans passed last month that would combine spending cuts with a debt ceiling increase would yield about $5 trillion in net savings over a decade, compared to current projections.

The latest Republican proposal calls for a nominal cut in total discretionary spending next year. But this cut is not evenly distributed; In her plan, military spending would continue to increase while other programs would face deeper cuts.

Mr. Biden’s offer includes a spending cap for two years. Republicans would set it at six years.

Republicans have also proposed several austerity measures that White House officials have objected to. These include new job requirements for recipients of Medicaid and the Temporary Assistance for Needy Families program. They would also make it more difficult for states to seek work requirement waivers for certain federal food aid recipients who live in areas with persistently high unemployment — a proposal that was not included in Republican’s debt-limit bill passed in the House of Representatives.

Republicans also continue to seek a cut in enforcement funding for the IRS, a move that the Congressional Budget Office estimates would actually widen the budget deficit by cutting future federal tax revenues. And they have attempted to incorporate some provisions of a tough immigration law recently passed in the House of Representatives, according to a person familiar with the proposal.

“We’re all concerned about deficits and fiscal accountability, but deficits can be addressed through changes in spending as well as changes in revenue,” Ms. Yellen said, adding that she was “very concerned” about Republican proposals to cut the funds for budget cuts IRS

Republican leaders on Saturday continued to blame White House negotiators for what they described as deteriorating discussions.

“The White House is backsliding in negotiations,” McCarthy wrote on Twitter. In a separate post, he blamed Mr. Biden for the impasse, saying the president “didn’t think there was a single dollar of savings to be found in the federal government’s budget.”

Mr Biden on Sunday insisted he was ready to cut spending. He also pointed out that some Republicans were attempting to crash the economy by not raising the credit limit to hurt Mr. Biden’s re-election hopes.

Should the nation default, Mr. Biden said, “I would be innocent of this” — meaning it would be Republicans’ fault. But, he said, “politically no one would be innocent.”

“I think there are some MAGA Republicans in the House who know the damage it would do to the economy, and because I’m president and the president is responsible for everything, Biden would take the blame,” he said.

Alan Rappeport, Carl Hulse and Chris Cameron contributed coverage.