President Joe Biden and congressional leaders from both parties are set to meet Tuesday to discuss the looming debt limit crisis, with Treasury Secretary Janet Yellen warning of “economic calamity” if Congress fails to raise the nation’s borrowing limit of $31.381 trillion in the coming weeks.
The issue has pitted the White House and Democrats against Republicans, led by House Speaker Kevin McCarthy of California, who are demanding spending cuts in return for raising the debt ceiling.
Yellen said Sunday on ABC’s “This Week” that if the borrowing limit is not increased before the Treasury Department runs out of “extraordinary measures” to operate under the current cap, the U.S. would not have enough cash to meet all its obligations, including interest payments on the debt, payments to Social Security recipients, and payments to Medicare providers.
“It’s widely agreed that financial and economic chaos would ensue,” she said.
Biden has said he will only negotiate about government spending once Congress takes the risk of default off the table. However, Republicans have made it clear they will not support a clean debt limit, and have proposed a bill that would raise the debt limit but also impose significant federal spending cuts.
Arizona Sen. Kyrsten Sinema, an independent who left the Democratic Party in December, encouraged Biden and McCarthy to meet each other half way.
“The sooner these two guys get in the room and listen to what the other one needs, the more likely they are to solve this challenge and protect the full faith and credit of the United States of America,” she said.
The 14th Amendment question – which allows the president to bypass Congress by citing the constitution’s clause that the “validity” of U.S. debt “shall not be questioned” – was studied by Obama administration lawyers during the 2011 debt limit showdown. Yellen said Sunday this should not be considered a valid solution, noting it would lead to a “constitutional crisis.”
“What to do if Congress fails to meet its responsibility? There are simply no good options,” she added.
Biden, in an interview with MSNBC on Friday, was asked about the 14th Amendment proposal, saying, “I’ve not gotten there yet.”
The issue of the debt limit has also been flagged as a national security threat. Rep. Mike Turner of Ohio, chairman of the House Intelligence Committee, said the Russians and Chinese would seek to exploit the situation, while Rep. Jim Himes, the committee’s top Democrat from Connecticut, warned that it’s hard for the U.S. to imagine what it might look like if it defaults on its debt.
“I think if the president fails to negotiate with Congress and has continued out–of–control spending that threatens our economy, that it is a national security threat,” Turner said.
Tuesday’s meeting between Biden and congressional leaders is the first substantive talks between Biden and McCarthy in months, and the outcome of the meeting will determine the fate of the U.S. economy.
