Prior to next week’s meeting between the four top congressional leaders and President Joe Biden, Debt limit negotiations appear to be in limbo.
Despite the brief lull in action, some lawmakers are intensifying their attacks on a Republican bill that would raise the debt ceiling in exchange for spending cuts.
Senate Democrats Hear Debt Limit Bill
At a Senate Budget Committee hearing on Thursday morning, members clashed over why a deal to avoid a default hasn’t been reached and accused party leaders of using the debt limit crisis as leverage, foreshadowing the political maneuvering that will likely occur in the coming weeks.
Senate Democrats are holding a series of hearings this month to highlight the economic implications of House Speaker Kevin McCarthy’s proposed debt limit bill, which they have mockingly dubbed the Default on America Act.
Senate Democrats have maintained their refusal to consider this legislation out of concern for the various policy concessions Republicans hope to extract from Democrats, such as a rollback of Biden’s clean energy tax credits and student loan cancellation plan, which the two sides sparred over for hours on Thursday.
Lawmakers Skeptical Of Reaching A Deal Soon
Mark Zandi, the chief economist of Moody’s Analytics and one of the witnesses, told lawmakers that there is a possibility that the Treasury Department will run out of cash to pay the government’s bills in as little as four weeks if the Republicans and the White House cannot reach a debt limit agreement.
During the hearing, Senate Democrats discussed the McCarthy bill’s giveaways to the fossil fuel industry, which would result from the rollback of clean energy incentives, and denounced the GOP’s plan to rescind extra funding for the Internal Revenue Service (IRS) to pursue tax evaders among the wealthy.
By rolling back key initiatives from Biden’s domestic agenda like tax credits for renewable energy and a plan to forgive federal student loans, the Republican bill would cut federal spending by nearly 14% over a decade.
Beginning the following year, it would also impose stricter work requirements for federal nutrition and health programs. According to Zandi’s calculations, the debt limit bill would raise unemployment by 0.5 percentage points and cost the economy 800,000.
After this meeting, other lawmakers say they will have a better understanding of the next steps, but they are skeptical that a deal will be reached soon. Sen. Gary Peters, Democrat of Michigan, stated, “The President will be organizing a meeting, and hopefully we’ll get a better sense of where McCarthy and the House Republicans stand.” “We must discover a way to come together.”
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