President Biden and Speaker Kevin McCarthy (R-Calif.) will sit down for the first time in months on Tuesday to discuss the nation’s debt limit.
Bipartisan negotiations on the matter have stalled since February — when they last met — as Democrats and Republicans remain divided over how to keep the nation from defaulting on its debt.
The Treasury warns the U.S. risks default as early as June 1 without congressional action, an outcome experts warn could have devastating economic effects here and around the world.
Here’s how we got to this point.
McCarthy’s historic bid for Speaker
The start of the 118th Congress saw a raucous beginning, as McCarthy weathered a historic 15 rounds of ballots before securing the Speaker’s gavel.
McCarthy agreed to multiple concessions to secure support from his GOP detractors during the bid. That included changes to make it easier to force a vote to oust a Speaker, and an agreement, lawmakers said then, to new limits on funding hashed out by Congress during the annual appropriations process.
Jan. 13: Yellen issues first debt limit warning
Less than a week after McCarthy won the gavel, Treasury Secretary Janet Yellen warned congressional leaders the U.S. would soon reach its roughly $31.4 trillion borrowing limit in the coming days.
The White House called for lawmakers to raise the debt limit, which restricts how much money the Treasury can owe to cover the country’s bills, without conditions.
Jan. 19: Treasury begins extraordinary measures
Yellen announced the Treasury Department would begin to implement “extraordinary measures” to keep the U.S. government from defaulting on its debt, but warned those measures could go exhausted as soon as June, absent congressional action.
Rep. Rosa DeLauro (Conn.), top Democrat on the House Appropriations Committee, sent letters to various agency heads on potential impacts of significant caps on government spending floated by Republicans.
Jan. 26: McCarthy takes entitlement cuts off table
McCarthy said changes to entitlement reforms are off the table in debt limit negotiations, as Democrats zero in on proposals from some Republicans to link potential changes to programs like Social Security and Medicare to debt limit talks.
Feb. 1: McCarthy and Biden meet
McCarthy and Biden had their first meeting discussing the debt ceiling, laying the groundwork for what would eventually be a months-long standoff over the country’s borrowing limit.
McCarthy expressed optimism, saying then that both sides “would continue the discussion” and that he feels there’s “opportunity here to come to an agreement on both sides.”
The White House describes the discussion as “a frank and straightforward dialogue” and said Biden would participate in “separate” talks with lawmakers over how to tackle the nation’s deficits.
Feb. 6: McCarthy pushes for deal
McCarthy pushed for both sides to strike a deal pairing action of the debt ceiling with spending reforms in remarks the night before Biden addressed Congress in his third State of the Union address.
“No drawing lines in the sand or saying it’s my way or the highway. No policy gimmicks or political games. But, most of all, no blank checks for runaway spending,” McCarthy said.
Not long after the address, the Speaker drew red lines in comments to reporters, ruling out “raising any taxes,” as Democrats targeted wealthy individuals for tax increases.
Feb. 7: State of the Union
Biden used part of his State of the Union address to take aim at Republicans he accused of wanting to hold the economy “hostage” over the debt limit.
A back-and-forth also ensued between Biden and Republicans at the address, as the president claimed “some Republicans want Social Security and Medicare to sunset,” prompting boos from Republicans.
Feb. 15: CBO warns of potential July default
The Congressional Budget Office (CBO) warned in a report that the federal government could default on its debt as early as July if Congress is unable to raise the debt limit.
The CBO also shared projections seized on by Republicans that estimated the national debt subject to the borrowing limit is on track to potentially reach $52 trillion in 2033.
March 8: GOP caucus unveils ‘policy menu’
The Republican Study Committee (RSC), the House’s biggest conservative caucus, unveiled a “policy menu” for debt limit talks detailing a list of proposals to potentially seek as concessions from Democrats in a deal.
That included an idea to tie the debt ceiling to a percentage of the overall economy, caps on discretionary spending, measures aimed at boosting domestic energy production, and more.
March 9: Biden releases budget proposal
Biden released a sweeping budget plan for the coming fiscal year to boost funding for a slew of Democratic priorities, as well as tax proposals targeting the wealthy to help pay for investments and reduce future deficits by trillions of dollars over the next decade.
March 10: Freedom Caucus releases proposal
The House Freedom Caucus released its own proposal to raise the debt proposal, paired with a pitch to cap discretionary spending at fiscal 2022 levels over the next decade, while limiting spending growth to one percent annually.
Other proposals featured in the plan would beef up work requirements for programs for government assistance programs like Medicaid, end Biden’s student loan forgiveness program, and claw back billions in already approved coronavirus funds they say have gone unspent.
The proposals face a tough chance in getting past the Senate but show what ideas the party’s most conservative members can back in a debt limit deal.
March 20: Agencies sound the alarm
Officials from nearly 20 agencies — including from departments of State, Treasury, Housing and Urban Development, Education and Veterans Affairs, as well as the Social Security Administration — sounded the alarm over the potential impact of steep spending cuts.
March 30: McCarthy vows to go it alone
McCarthy told reporters Republicans plan to move on their own measure to act on the debt limit with party-backed spending proposals if Biden refuses to negotiate reforms.
April 17: McCarthy makes case to Wall Street
McCarthy took his case for spending cuts to Wall Street, going after Biden and detailing the House GOP’s plan to move forward with its own measure soon to put pressure on Democrats to come to the bargaining table.
“We will curb inflation and we will protect Social Security and Medicare for the next generation, and America will be stronger for it,” he said in remarks at the New York Stock Exchange. “If you agree, don’t sit back, join us.”
April 19: Bipartisan caucus proposes fallback plan
The bipartisan Problem Solvers Caucus, which consists of more than 60 centrist lawmakers on both sides, released a potential fallback plan that involves a temporary suspension to the debt limit to buy time for Congress to strike a deal.
The plan would kick the deadline through the end of the year, allow Congress to work out budget negotiations for fiscal 2024, while also pressing for a special commission to explore ways to tackle the nation’s deficits.
Later that day, House Republicans unveiled their debt limit plan, dubbed the Limit, Save, Grow Act of 2023.
April 25-26: GOP leaders whip debt limit bill
In a sprint to pass the plan, GOP leaders held last-minute negotiations with members to lock down support for the bill, despite past comments from leaders resisting any changes.
The talks lead to changes in provisions dealing with tax credits for biofuels after pressure from Midwestern Republicans, and tweaks to proposed work requirements for assistance programs.
April 26: House Republicans pass sweeting debt ceiling proposal
House Republicans passed their sweeping debt limit plan in a tight vote, with GOP Reps. Ken Buck (Colo.), Matt Gaetz (Fla.), Andy Biggs (Ariz.) and Tim Burchett (Tenn.) joining all voting Democrats in opposition.
Democrats immediately slammed the bill, but Republican leaders use the passage to put pressure on Biden shortly after.
“The president can no longer ignore by not negotiating,” McCarthy tells reports after the vote.
May 1: Yellen announces June 1 ‘X-date’
Yellens warned that lawmakers could have until as early as June 1 to act on the debt limit, pointing to tax revenues.
Biden moved to set up a meeting with McCarthy and congressional leaders on May 9 at the White house to discuss the debt ceiling.
May 2: House Democrats unveil secret backup plan
House Democrats set in motion a secret plan aimed at ultimately forcing a vote on lifting the debt limit, as both sides struggle to find common ground on spending.
The bid involves a discharge petition, a procedure that would allow Democrats to try to force floor action on legislation supported by a majority of House lawmakers, despite opposition from McCarthy. But it’s immediately clear the plan faces tough chances of success, as Democrats would need the support of a handful of Republicans to back it.
May 6: McConnell, Senate Republicans back spending cuts
Senate Minority Leader Mitch McConnell (R-Ky.) joined more than 40 Senate Republicans in signing onto a letter vowing not to advance legislation raising the debt limit “without substantive spending and budget reforms.”
“The Senate Republican conference is united behind the House Republican conference in support of spending cuts and structural budget reform as a starting point for negotiations on the debt ceiling,” they wrote.
Six Senate Republicans weren’t featured among the letter’s signatories. But with all Democrats voting, the party would the support of at least nine Republicans to overcome a 60-vote threshold to advance most bills in the Senate.
The push comes after another letter from GOP senators earlier this year drew red lines around voting for a debt limit increase without conditions. But that letter only featured signatures from just about half of the conference.
Source: The Hill
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