Biden Caves to McCarthy, Agrees to Meet the Speaker About Raising the Debt Limit

After weeks of saying he would never meet with House Republicans to raise the debt limit, Joe Biden was forced to cave to the Republicans after his Treasury Secretary Janet Yellen gave Washington a drop dead date for raising the debt ceiling — June 1.

The date was at least a month earlier than most experts were predicting. And with Republicans already having a debt limit bill in hand, Biden reluctantly agreed to drop his demand for a “clean” debt limit bill with no negotiations.

Biden’s position was never viable. So the president must now talk about budget cuts with the GOP or find a way to avoid the blame if the whole kit and kaboodle goes south.

Democrats have one bullet they can use. Because they control the Senate, they can bring a “clean” debt limit bill to the floor and dare the GOP House to defeat it. But it’s not even clear that Democrats can pass a clean bill in the Senate, and Majority Leader Chuck Schumer may not risk it.

Despite the urgency, Biden has scheduled the meeting for May 9.

Washington Post:

But with Monday’s news that default could come as soon as next month, the president set in motion a plan to hold talks on May 9, personally calling McCarthy as well as Senate Majority Leader Charles E. Schumer (D-N.Y.), Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Hakeem Jeffries (D-N.Y.), according to a White House official, who spoke on the condition of anonymity to describe private conversations.

The Treasury Department, meanwhile, sounded an urgent alarm about the need for haste: In a letter to lawmakers, Treasury Secretary Janet L. Yellen said the agency may be “unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1.”

Whether the Republicans believe Yellen or not is immaterial. Wall Street and world financial markets will believe her. And that may be enough to set in motion a cascading failure of the economy.

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“We should pass a clean debt ceiling and then we should figure out a path forward so we aren’t doing this every year,” said Sen. Jon Tester (D-Mont.), who faces a difficult reelection campaign, “I would like to see it done by figuring out ways that we can reduce the deficit and reduce the debt for a long term. And, quite frankly, get to a point where we have a balanced budget.”

Tester and the Democrats have to know how united the GOP is in backing McCarthy. Even Mitt Romney is supporting McCarthy’s budget cuts. “I’m supporting the House provision,” Romney told Politico.

In the past, Senate Republicans have torpedoed any effort to tie spending cuts to raising the debt limit. Twice in 2021, senators caved to Biden and raised the debt ceiling with no strings attached.

But if Sen. Schumer and the president think they’ll get the same outcome this time, they should note that there’s a different lineup in the Senate and they’re not as eager to cut a deal as senators were in 2021.

Of course, Senate Republicans have said that before and twice buckled in 2021, lifting the debt limit with no strings attached. Clearly Schumer sees the same possibility: He spoke to Biden about a “clean” debt ceiling increase on Monday, according to a spokesperson, and put out a joint statement with House Minority Leader Hakeem Jeffries (D-N.Y.) calling for a debt increase without concessions.

But with McCarthy leading the House, conditions are less favorable for that type of result. And several dealmaking GOP senators who provided key debt-ceiling votes last Congress have retired, replaced by more conservative members.

Putting a finer point on it, Sen. Lindsey Graham (R-S.C.) said: “I don’t think there are 10 Republican votes to undercut Kevin McCarthy.”

I don’t think there’s time to get the kind of comprehensive deal on entitlement programs the Republicans passed in their bill. But they should be able to pull important concessions from Biden and the Democrats in any negotiations. It will be a far cry from a “clean” debt limit bill but not quite the major reforms that many Republicans are seeking.