The President and the Democrats have caved on the debt ceiling. The Republicans came together and passed a bill to increase the debt ceiling while making modest cuts to government expenditure.
Biden held out for 97 days and refused to discuss the ceiling in the same breath as spending. Last week, he blinked by saying there were certain things he would take off the table, such as the Inflation Reduction Act, which implied that he was willing to negotiate.
The potential success of that accord may be aided by Biden’s upcoming trip to the Far East. The U.S. Treasury has warned that it may not have enough money to pay its debts beginning June 1. According to analysts, such an event would likely lead to a recession.
The goal of the negotiations is to reach a compromise before Biden’s return to Washington on Sunday; after that, Congress would have to move quickly to meet the June 1 deadline. The five-person arrangement of last week’s conversations between the president and the three other top congressional leaders has been reduced to a two-person session.
On Wednesday, Biden met with Senate Majority Leader Chuck Schumer, Senate Republican Leader Mitch McConnell, and House Democratic Leader Hakeem Jeffries before leaving for the Group of Seven meetings of world leaders in Hiroshima, Japan.
U.S. stocks rose on Wednesday partly due to cautious optimism among investors amid the ongoing talks, suggesting that the news lifted the financial markets.
McCarthy stated that the House would vote on any agreement before sending it to the Senate for approval, where Biden’s Democrats hold a 51-49 majority. The duration of any contract, the inclusion of job requirements in poverty relief programs, and budget restrictions are all points of discussion. Biden has previously said he would not be open to discussing work requirements for the Medicaid health insurance program for low-income Americans.
McCarthy defended the conservative push for work requirements, arguing that they would benefit the economy and the workers, and vowed to keep taxes out of the debate.
Jeffries expressed optimism that a bipartisan agreement could be reached, but he also stated that if necessary, House Democrats would file a “discharge petition” to circumvent the standard rules of the chamber and take action on the debt limit.