5:36 p.m. ET, May 23, 2023
Here's what you should know about the nation's debt ceiling drama
From CNN staff
McCarthy speaks to reporters at the US Capitol in Washington, DC on Tuesday, May 23
Andrew Caballero-Reynolds/AFP/Getty Images
White House and House Republican negotiators met Tuesday as the clock ticks on the
nation's debt ceiling drama.
Talks are not going well, according to key GOP negotiators Patrick McHenry and Garret Graves. And House Speaker Kevin McCarthy said Tuesday that
he’s not close to a bipartisan deal with President Joe Biden to avoid a first-ever default on the nation’s debt. He
left the Capitol on Tuesday and told reporters that he does not expect a debt ceiling deal to come through today.
Exactly when the federal government will no longer be able to pay its bills in full and on time is not known, but it could come
as soon as early June.
Here's what you should know:
Talks on the table: McHenry
refused to say whether the White House and Republicans have discussed a short-term bill to raise or suspend the debt limit in the event a deal cannot be reached by the deadline for a potential government default. He argued, however, that there are "technical challenges" to doing that. McHenry and Graves said the White House needs to realize they have to agree to cut spending or no deal can be reached.
Graves told reporters that as the negotiators deal with spending, they also
have to be dealing with the reality of the other issues that have become part of these talks, including clawing back unspent Covid funds, new work requirements and other issues.
McCarthy said he thinks Biden is trying to “disrupt”
debt ceiling negotiations by bringing proposals involving
Medicare and Social Security back on the table. McCarthy also said he wanted longer spending, saying that “the country would be in better shape” if they were extended out. The White House has said cuts to Social Security and Medicare are off the table in debt ceiling negotiations. But they have long telegraphed an interest in expanding Medicare drug price negotiation, which would raise additional revenue by allowing the government to negotiate the prices of more prescription drugs.
Democrats and Republicans remain divided: House members on both sides of the aisle remain divided over the approach to debt ceiling discussions. House Democratic Leader Hakeem Jeffries on Monday evening asserted that talks are moving in the “wrong direction.” Jeffries’ position is critical because McCarthy will almost certainly need House Democratic support to pass any deal cut with the White House. Still, a number of Republicans – even some who haven’t always backed McCarthy – said they are standing by the speaker and are happy with how he’s negotiated up until this point.
Implications of a default. If Congress fails to address the debt ceiling, the
federal government could run out of money as soon as June 1, according to Treasury Secretary Janet Yellen. The nonpartisan Congressional Budget Office said Friday there is a
“significant risk” the federal government will no longer be able to pay all of its obligations during the first two weeks of June. Experts warn of dire consequences for American families in the case of an unprecedented default on US debt including the possibilities of mass layoffs, market mayhem and spiked borrowing costs. If the US defaults on its debt, it would also raise questions about the safety and viability of US Treasuries. However, an analysis released by the Atlantic Council on Tuesday says investors may actually buy
more US Treasuries.