President Joe Biden on Friday gave a window into how he’s preparing for a looming political showdown over the debt ceiling, stating unequivocally that he will not relent to Republican lawmakers threatening to send the nation into default if he doesn’t meet their demands, but adding that he doesn’t support Democrats’ efforts to abolish the debt limit entirely.
In remarks at the White House less than three weeks before the midterm elections, the President touted a $1.4 trillion decline in the federal deficit and discussed what he sees as dire fiscal consequences if Republicans regain majorities in Congress. The GOP, Biden argued, will “threaten the very foundations of the American economy if we don’t meet their demands.”
“They will crash the economy next year by threatening the full faith and credit of the United States for the first time in our history, putting the United States in default unless we yield to their demand to cut Social Security and Medicare,” he said. “Let me be really clear. I will not yield. I will not cut Social Security. I will not cut Medicare, no matter how hard they work at it.”
Biden’s decision to directly address the debt ceiling issue at all – and draw early red lines for any potential negotiation – elevates a very real concern simmering among lawmakers facing the possibility of Republican majorities. The debt limit has been a threshold that has driven fiscal battles – and one downgrade of the nation’s credit rating – over more than a decade, and several House Republicans have made clear they plan to use it to extract policy wins.
House GOP Leader Kevin McCarthy, likely the next speaker should Republicans win the majority in November, thrust the issue to the forefront with comments earlier this week that echoed those of several colleagues.
“If people want to make a debt ceiling (for a longer period of time), just like anything else, there comes a point in time where, OK, we’ll provide you more money, but you got to change your current behavior,” he said in an interview with Punchbowl News.
Quietly, there have been early stage discussions on both sides of Pennsylvania Avenue regarding how to deal with the equivalent of the ticking time bomb that an increase or suspension to the nation’s borrowing limit represents. While Congress set the limit to curtail government borrowing, lawmakers have routinely raised it every time it has been hit.
Biden’s unequivocal response to Republican threats came the same day several House Democrats sent a letter to House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer calling for legislation to “permanently undo the debt limit” during the post-election lame-duck session on Capitol Hill. The letter, led by Pennsylvania Rep. Brendan Boyle, was signed by several prominent House Democrats, including Caucus Chair Hakeem Jeffries of New York.
Biden said on Friday that he does not support legislation that would permanently repeal the debt ceiling, a proposal he called “irresponsible.” However, there are other potential pathways to address the debt limit in the lame duck session, even if the tight timeline and packed agenda would appear to make any effort a heavy lift.
Biden’s stance on the issue puts him at odds with Treasury Secretary Janet Yellen, who in 2021 expressed support for legislation to abolish the debt ceiling.
“I think it’s become increasingly damaging to America to have a debt ceiling,” Yellen told CNN’s “Erin Burnett Out Front” last year. “It’s led to a series of politically dangerous conflicts that have caused Americans and global markets to question whether or not America is serious about paying its bills. It’s flirting with the self inflicted crisis and it really involves the government giving to their treasury secretary and their president conflicting sets of instructions.”
Mandates instructing Treasury to cover expenditures, authorize tax collections and set a requirement that can’t let the debt run above a given limit “can come into conflict,” she said, adding, “It’s an impossible situation.”
She continued, “Congress needs to debate these issues when they’re deciding on spending in taxation, not to every several years, put a hard stop and say, well, ‘Now, we’re not going to let the Treasury secretary pay the nation’s bills.’”