President Biden said Sunday he believes he has the authority to challenge the constitutionality of the nation's borrowing limit but he doesn't believe such a challenge could succeed in time to avoid defaulting on the federal debt if lawmakers don't raise the limit soon.
“I think we have the authority,” Biden said at a news conference after the Group of 7 summit in Hiroshima, Japan. “The question is can it be done and requested in a timely manner.”
Mr. Biden added that once the current crisis is resolved, he hopes to “find excuses and take them to court” to decide whether the debt limit violates a clause in the 14th Amendment that stipulates that the United States must pay its debts. He also said that, while meeting with world leaders, he was unable to convince them that America would not default on its debts—an event economists say could trigger a financial crisis that would engulf the world.
“I can't guarantee that they won't enforce a default by doing something outrageous,” Biden said, referring to the Republican congressman who insisted on sweeping cuts to federal spending in exchange for raising the borrowing limit.
Mr. Biden and Speaker Kevin McCarthy are currently negotiating a fiscal package that will include raising that lending limit. They remain far apart on key issues, including federal spending limits, new job requirements for some recipients of federal anti-poverty assistance and funding intended to help the IRS crack down on high-income people and tax-evading corporations.
The two men were scheduled to speak by phone on Sunday shortly after the press conference when Biden returns to Washington hoping to revive the faltering talks. The talks will follow a weekend in which Republican leaders and White House officials have exchanged accusations from other parts of the world—punctuated by Mr. Biden's attacks on Republicans in press conferences.
Treasury Department officials estimate that there are more than two weeks before the federal government could lose its ability to pay its bills on time, forcing a default. Both Mr. Biden and Mr. McCarthy expressed increasing optimism last weekend that they could reach a deal that would pave the way for Congress to raise the borrowing limit while also reducing some federal spending, which Republicans have been pressing for as a condition for any debt. -increase limit.
“The difficulty is that nothing is agreed upon at all,” said Mr. McCarthy on “Sunday Morning Futures” from Fox News. “All the discussions we had before, I feel like we're somewhere we can mutually agree, that we're going to compromise.”
Instead, McCarthy argues, the president “went overseas and now he wants to change the debate.”
Treasury Secretary Janet L. Yellen is expected to provide another update to Congress on the federal government's cash balance this week. On Sunday, Ms. Yellen indicated that her projection that the United States would not be able to pay all of its bills on time after June 1 has not changed.
“I certainly haven't changed my judgment, so I think it's a tough deadline,” said Ms. Yellen on NBC's “Meet the Press.”
Ms Yellen noted that the government expects to receive a big tax payment on June 15 which could extend the so-called X-date later into the summer. But he warned that it would be very difficult to reach that date and the chances of getting that far were “pretty low”.
Minister of Finance, who warned last week that a default would “result in an economic and financial disaster,” he said, not exaggerating the gravity of the looming crisis.
“There will be difficult choices to make if the debt ceiling is not raised,” said Ms. Yellen, explained that if the US runs out of money to pay all of its bills, some will have to go unpaid.
That hope has dimmed at least a bit in the last 48 hours. Mr. Biden's aides accused Republicans of backtracking in key areas of negotiations, and Republicans accused the White House of refusing to budge on top conservative priorities.
Mr. Biden criticized Republicans on Sunday for not considering raising additional tax revenue to reduce future budget deficits as part of the negotiations. He said he had proposed a discretionary spending cap that would save $1 trillion over a decade compared to baseline projections.
“It's time for Republicans to accept that no budget deal is made solely on their partisan terms,” he said.
Representative Jodey C. Arrington, Texas Republican and chair of the Budget Committee, on Sunday steadfastly ruled out Republicans accepting tax increases as part of a debt limit deal despite the president's push.
“That's not on the table to discuss,” said Mr. Arrington on ABC's “This Week”. “This is not the time to put taxes on our economy or on working families.”
Some of the thorns seemed meant to shore up each side's base. Hardline spending hawks in the House have been pressing McCarthy to demand much bigger concessions from Biden. Some progressive Democrats have pushed Biden to drop negotiations and instead act unilaterally to challenge the debt limit on constitutional grounds.
Senator Bill Cassidy, a Louisiana Republican, said invoking the 14th Amendment would be overreaching.
“This is yet another example of a president taking constitutionally delegated spending authority from the House of Representatives and trying to incorporate it into the White House,” he said on CNN's “State of the Union.”
The two sides had struck several agreements in talks in the last week, including to withdraw some unused funds from a previously approved Covid relief law. They have also broadly agreed to some sort of discretionary federal spending cap for at least the next two years. But they stuck to the details of those limits, including how much to spend overall next fiscal year on discretionary programs—and how to divide that spending among the military and other programs.
The latest White House bid would hold military and other spending—which includes education, scientific research, and environmental protection—constant from the current fiscal year into the next, according to a person familiar with both sides' proposals. The move would not reduce nominal spending before it is adjusted for inflation, which Republicans have found difficult to do. Asked by a reporter on Sunday, Biden said his proposed spending cuts would not lead to a recession.
A bill passed by Republicans last month that pairs spending cuts with increased debt limits would result in about $5 trillion in net savings over a decade compared to current projections.
The Republican Party's latest proposal includes a nominal reduction in total discretionary spending next year. But the chunks aren't evenly distributed; in their plans, military spending will continue to increase, while other programs will face bigger cuts.
Mr. Biden's offer would set a spending cap for two years. Republicans will keep it for six years.
Republicans have also proposed several attempts to save money that White House officials have rejected. That includes new work requirements for Medicaid recipients and the Temporary Assistance to Families in Need program. They would also make it more difficult for states to seek waivers of work requirements for certain federal food aid recipients who live in areas with high unemployment rates — a proposal that was not on the Republican debt limit bill passed by the House of Representatives.
Republicans also continue to seek reduced enforcement funding for the IRS, a move the Congressional Budget Office predicts will actually create a larger budget deficit by reducing future federal tax revenue. And they have sought to incorporate some of the provisions of the strict immigration law recently passed by the House, according to a person familiar with the proposal.
“We are all concerned about deficits and fiscal responsibility, but deficits can be addressed both through changes in spending and through changes in income,” said Ms. Yellen, added that she was “deeply concerned” about the proposal from Republicans to cut funding for the IRS
Republican leaders on Saturday continued to blame White House negotiators for what they called a slide in the discussions.
“The White House is moving backwards in negotiations,” McCarthy wrote on Twitter. In a separate post, he blamed Mr. Biden for the impasse, saying the president did not “think there was a single dollar of savings to be found in the federal government's budget.”
Mr. Biden insisted Sunday that he was willing to cut spending. He also suggested that some Republicans are trying to destroy the economy by not raising the lending limit, to hurt Mr. Biden's hopes of winning re-election.
If the state defaults, Mr. Biden said, “I will not be guilty” of merit – meaning it will be the fault of the Republican Party. But, he said, “in that politics, no one is innocent.”
“I think there are some MAGA Republicans in the House who know the damage it's going to do to the economy, and because I'm the president, and the president is in charge of everything, Biden will be blamed,” he said.
Alan Rapport, Carl Hulse And Chris Cameron reporting contribution.