President Joe Biden, Vice President Kamala Harris and congressional leaders will meet once again on Tuesday as the United States prepares to reach its debt limit.
There is consensus that the U.S. going over its debt limit would have dire consequences for the economy. However, both parties have drawn a line in the sand on how to address it. Democrats have insisted on a bill that just addresses the debt limit. House Speaker Kevin McCarthy said Republicans want to include spending cuts on non-discretionary programs.
In a letter to congressional leaders on Monday, Treasury Secretary Janet Yellen said the U.S. remains on track to reach the debt limit in early June.
"If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests," Yellen wrote.
The Treasury says the U.S. debt limit is "the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments."
Yellen has warned that the U.S. exceeding its debt limit could cause a disruption to things like Social Security payments.
What do Republicans want in the debt ceiling fight?
Conservatives believe the debt limit should be raised in exchange for some spending cuts. Here's what they want.
Late last month, the Republican-led House passed a bill that would extend the debt ceiling to March 31, 2024, and cut spending.
For instance, the bill includes cuts to Medicaid, which the Congressional Budget Office estimateswould increase the number of uninsured Americans by 600,000. It would also change the administration’s rule on income-driven student loan repayments, raising monthly payments for many borrowers. It would increase the number of Americans required to work in order to receive Supplemental Nutrition Assistance Program food benefits. The spending cuts would also reduce clean energy tax credits.
"House Republicans just delivered a plan that will address the country’s debt crisis. Our conference came together to pass the only plan in Washington that will tackle the debt ceiling, stop excessive federal spending and inflation, and put our country back on track for sustained economic growth," McCarthy said.
Meanwhile, President Biden said last week that he was exploring whether he could use the 14th Amendment to bypass Congress to pay the nation’s debt. The 14th Amendment contains language addressing U.S. debt.
"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void," a section of the 14th Amendment reads.
Harvard Law professor Laurence Tribe is one of the most notable proponents of using the 14th Amendment to address the debt ceiling. Tribe’s former students include former President Barack Obama, Supreme Court Chief Justice John Roberts and Sen. Ted Cruz.
"I have been considering the 14th Amendment," President Biden said last week. "I have enormous respect for Larry Tribe, who advised me for a long time, thinks that it would be legitimate. But the problem is it would have to be litigated. And in the meantime, without an extension, it would still end up in the same place."
