Biden’s no- negotiation stance was influenced by past debt limit problems

Congressional Democrats Reconcile the Issue of Debt and Spending in a Band-Aid Economy: Kevin Biden, Kevin McCarthy, and Sen. Mike Lee

It’s the first time Biden and House Speaker Kevin McCarthy, R-Calif., will meet on this issue since the pair met in February. They will be joined by House Minority leader Hakeem Jeffries, D-N.Y., along with Senate Majority leader Chuck Schumer, D-N.Y.

The Treasury Department has been employing extraordinary measures to essentially act as a Band-Aid for several months. If Congress fails to raise the debt limit by the time those measures are exhausted, which Yellen says could happen as soon as June 1, there would be an unprecedented debt default, whose effects would likely be felt worldwide and lead to a recession in the United States.

The House Republicans passed a bill last month that would raise the debt limit by 1.5 trillion dollars or until March 14th of 2024, if it comes first.

But Democrats and the White House continue to insist that the bill is a nonstarter. Jeffries called the measure a “ransom note,” and the bill is dead on arrival in the Democratic-controlled Senate.

Congressional Democrats, along with Biden, insist legislation that addresses the debt ceiling in tandem with spending cuts is tantamount to holding the economy hostage. They are advocating for a “clean” bill that would prevent what would be the first-ever U.S. debt default and then separate negotiations on any spending cuts.

“We’re not a deadbeat nation. We pay our bills,” Biden said recently. “I’ve said all along: We can debate where to cut, how much to spend, how to finally move the tax system where everybody begins to pay their fair share or continue the route they’re on. … But not under the threat of default.”

The debt limit was raised multiple times when Trump was in office according to Biden and Democrats.

In an interview with MSNBC, Biden said that McCarthy was put in a position where he would have to agree with things he did not like in order to stay speaker.

McCarthy ultimately won a protracted fight for the speaker’s gavel after pledging to a bloc of hard-line Republican lawmakers that he would not allow a House vote on a bill to increase the country’s borrowing authority without federal spending reductions.

On Saturday, Sen. Mike Lee of Utah sent a letter, co-signed by 42 fellow Senate Republicans, to Schumer saying they oppose raising the ceiling without “substantive spending and budget reforms.”

Biden’s Deal with Congress: The Case for a Solution to the Budget Problems of the U.S. Senate and the Corresponding Budget Problem

The Tuesday meeting falls as the conservative American Action Network is airing a $250,000 cable ad campaign in the Washington, D.C., area calling on Biden to negotiate with congressional Republicans.

Joshua Bolten, CEO of Business Roundtable, released a statement ahead of the meeting stating that the cost of a default or threat of a default is too high.

“A default would deliver a severe blow to the economy, leading to widespread job losses, decimated retirement savings and higher borrowing costs for families, businesses and the government,” he said. “Failing to raise the debt limit would also threaten the U.S. dollar’s central role in the global financial system to the benefit of China.”

Jeffries, chairman of the Financial ServicesCommittee, wouldn’t rule out a short term fix to buy lawmakers more time to craft a longer term deal.

That has not always been the case. Republicans have pointed out in recent weeks that, as a senator, Mr. Biden railed against budget deficits during the Reagan presidency. In 1984, he presented a proposal to freeze federal spending for a year. He said his plan would “shock the living devil out of everyone in the U.S. Senate,” but it went nowhere.

And as vice president, Mr. Biden tied the debt limit and budget issues in 2011, when he was negotiating for the Obama administration. In remarks to reporters on Tuesday, Mr. Biden suggested that he only did that because he had been instructed to get a deal done.

“I got a call that morning at 6 o’clock saying that the Republican leader would only talk to me, and there was no time left,” he said. “And so I sat down, and I got instructions from the White House to settle it. And that was my job. I had no notice of that.

In the spring of the year 2011, Mr. Biden and a bipartisan group of congressional leaders met to discuss their differences. In early meetings, the group gathered at Blair House, where foreign dignitaries stay when they visit Washington. Mr. Boehner broke off negotiations because rank-and-file Republicans would not agree to raise taxes on the wealthy. A deal was reached weeks later in order for Mr. Obama to explain to the electorate why he was not able to raise taxes.