Debt limit meeting postponed, White House says

Biden (Copyright 2023 The Associated Press. All rights reserved)
Biden (Copyright 2023 The Associated Press. All rights reserved)

A planned Friday meeting between President Joe Biden and top Congressional leaders to discuss how to raise the nation’s statutory debt ceiling will be postponed until next week, the White House has said.

A White House spokesperson told The Independent on Thursday that executive branch and legislative staff will continue working on a possible deal to resolve the months-long impasse over lifting the debt limit, which restricts the amount of bonds the US Treasury may have outstanding at any given time.

“Staff will continue working and all the principals agreed to meet early next week,” the spokesperson said.

The aborted meeting would have been the second set of talks this week between Mr Biden, House Speaker Kevin McCarthy, Minority Leader Hakeem Jeffries, Senate Majority Leader Chuck Schumer and Minority Leader Mitch McConnell, who on Wednesday met to hash out a way to prevent the US government from defaulting on its’ sovereign debt.

That Wednesday session — the first between Mr Biden and Mr McCarthy in months, was characterised by the House Speaker as unproductive in remarks to reporters after the meeting came to a close.

In separate remarks later that day, Mr Biden offered the opposite opinion by calling the session “productive” and said he and the House and Senate leaders would gather again on Friday after their respective staffs gathered on Thursday.

But Biden Administration officials are now saying the postponement is a good thing and should be considered a sign of progress.

A source familiar with the inter-branch talks called the delay “a positive development”.

“Meetings are progressing. Staff is continuing to meet and it wasn’t the right moment to bring it back to principals,” they said.

The conflict between the legislature and the White House over allowing the US to continue borrowing to meet already-incurred obligations has left investors skittish over whether the government will actually default on its’ debts.

While Mr Biden has continually insisted that Congress raise the statutory limit in the same manner as it did during previous presidencies, Mr McCarthy has maintained that his conference will not allow an increase in the debt limit absent significant concessions from the president.

Prominent GOP figures frequently claim that raising the statutory debt limit to enable the US to continue meeting financial obligations — a practice that was once routine under presidents of both parties and met no objections when it was done under Mr Biden’s predecessor — is akin to authorising new spending.

That claim, however, is not how the debt limit works. Raising the debt limit does not increase or decrease the amount of money that is spent on programmes that have already been authorised by Congress and have had funds allocated to them in appropriations legislation.

Experts say a failure to raise the debt limit would force the government to default on its debt and precipitate a worldwide financial crisis. The last time the US flirted with that disastrous outcome was 2011, when Republicans controlled the House and Democrats controlled the Senate and the White House. Mr Biden, then the vice president under Barack Obama, led the negotiations with congressional leaders that headed off a default, but not before the US had its credit rating decreased for the first time in history.

That 2011 dispute ended with Republicans suffering a drop in their approval ratings and facing accusations of endangering the US economy for political reasons. It also came along with an unprecedented downgrade in America’s credit rating. Those same charges are being raised again now by the White House and the president’s allies in Congress, who are holding firm on Mr Biden’s call for a clean debt limit boost.