Tuesday Reads: The Debt Limit and Other News

Good Afternoon!!

The Republicans have been playing Russian Roulette with the U.S. debt ceiling; and yesterday Janet Yellen announced that the situation is becoming dire.

Politico reports:

President Joe Biden invited Congress’ top four leaders in both parties to a May 9 meeting after the Treasury Department delivered a stark Monday warning: The nation could hit its existing debt ceiling as soon as June 1.

Biden called Hill leaders following Treasury Secretary Janet Yellen’s warning that the U.S. could default on its $31.4 trillion in debt in as little as 30 days. Yellen’s stunning forecast piles new pressure on Hill leaders and the White House to strike a bipartisan fiscal deal as cross-party talks remain deadlocked.

While the secretary’s letter was sent after markets closed on Wall Street, the prediction landed hard on the Hill, where lawmakers hoped they’d have months to maneuver past the current impasse between Biden and Speaker Kevin McCarthy. Now, they could have only a few weeks before a potential economic catastrophe.\

On Monday night, Senate Majority Leader Chuck Schumer teed up two pieces of legislation: the debt-limit bill House Republicans passed last week that includes significant spending cuts and one that would suspend the debt limit through the 2024 election with no strings attached. While his actions don’t guarantee a floor vote on either, a Schumer spokesperson said “this process will ensure that once a clean debt ceiling is passed, the House bill is available for a bipartisan agreement” on spending and taxes “as part of the regular budget process.”

Biden’s invite included Schumer, McCarthy, House Minority Leader Hakeem Jeffries and Senate Minority Leader Mitch McConnell. The president’s calls were first reported by The Washington Post….

“Given the current projections, it is imperative that Congress act as soon as possible to increase or suspend the debt limit in a way that provides longer-term certainty that the government will continue to make its payments,” Yellen said, noting that it is impossible to predict the exact date the nation could default.

The Hill: McConnell insists he’s sitting out debt talks — to disbelief.

Senate GOP Leader Mitch McConnell (Ky.) insists he will not come up with a rescue plan this time as Republicans and a Democratic president battle over the debt limit.

McConnell has a long history of negotiating with President Biden on high-profile issues, such as extending the Bush tax cuts at the end of 2010, avoiding a national default in 2011 and avoiding the fiscal cliff at the end of 2012.

But McConnell says Biden and Speaker Kevin McCarthy (R-Calif.) need to work out a deal on the debt limit among themselves, arguing any proposal that originates from the Senate can’t pass the House.

“The president knows how to do this. … Until he and the Speaker of the House reach an agreement, we’ll be at a standoff,” McConnell told reporters. “We have divided government. The president and the Speaker need to come together and solve the problem.”

Republican aides say McConnell’s strategy has the advantage of also keeping Senate Majority Leader Chuck Schumer (D-N.Y.), whom Republicans see as a tougher negotiator than Biden, out of the talks.

A Senate Republican aide says Schumer also has more “leverage” than House Democratic Leader Hakeem Jeffries (N.Y.), who is in the minority and was recently elected to the House Democrat’s top leadership job.

McConnell’s insistence that he won’t step in at the last moment to cut a deal with Democrats to extend the nation’s borrowing authority is being met with widespread skepticism, however, even from fellow Republican senators.

See also this piece at Bloomberg by Matt Yglesias: Only Mitch McConnell Can Save the US From Default. It’s fairly long. Biden has made it clear that he won’t negotiate about raising the debt ceiling. He will insist on a clean bill.

Politico: Biden won’t move on debt ceiling terms even as he seeks to restart talks.

The debt ceiling crisis has arrived on President Joe Biden’s doorstep — and left his administration with far less time than anticipated to solve it.

But don’t expect the White House to change tactics any time soon.

Administration officials on Monday insisted that Biden has no plans to drop his demand for a clean debt ceiling increase, even after Treasury Secretary Janet Yellen’s warning that Congress may only have until June 1 to avert a disastrous default.

The new calculation drastically raised the stakes of the ongoing standoff over the nation’s debt limit, turning what officials expected would be a monthslong political fight into a brutal four-week brawl with the fate of the U.S. economy on the line.

“If you need to hear again that it’s your responsibility to address the debt ceiling without conditions and a ransom,” said a senior administration official who spoke about internal thinking on condition of anonymity, “then he can say that again.”

The stance reflects the West Wing’s belief that they can not set a template for having the debt ceiling serve as a point of political leverage for the opposition. It also reflects continued confidence that Biden still holds the stronger hand in a debt ceiling staredown, and that it was always a matter of when — not if — the two sides reached a crisis point.

Biden has vowed for months not to negotiate over the debt ceiling, deriding Republicans’ demands for concessions as “hostage taking” that risks tanking the country’s global reputation and economic stability.

Don’t mess with Dark Brandon.

More on the Democrats’ strategies:

The New York Times reports:

The only clue to the gambit was in the title of the otherwise obscure hodgepodge of a bill: “The Breaking the Gridlock Act.”

But the 45-page legislation, introduced without fanfare in January by a little-known Democrat, Representative Mark DeSaulnier of California, is part of a confidential, previously unreported, strategy Democrats have been plotting for months to quietly smooth the way for action by Congress to avert a devastating federal default if debt ceiling talks remain deadlocked.

With the possibility of a default now projected as soon as June 1, Democrats on Tuesday began taking steps to deploy the secret weapon they have been holding in reserve. They started the process of trying to force a debt-limit increase bill to the floor through a so-called discharge petition that could bypass Republican leaders who have refused to raise the ceiling unless President Biden agrees to spending cuts and policy changes.

“House Democrats are working to make sure we have all options at our disposal to avoid a default,” Representative Hakeem Jeffries, Democrat of New York and the minority leader, wrote in a letter to colleagues on Tuesday, which was obtained by The New York Times. “The filing of a debt ceiling measure to be brought up on the discharge calendar preserves an important option. It is now time for MAGA Republicans to act in a bipartisan manner to pay America’s bills without extreme conditions.”

An emergency rule Democrats introduced on Tuesday, during a pro forma session held while the House is in recess, would start the clock on a process that would allow them to begin collecting signatures as soon as May 16 on such a petition, which can force action on a bill if a majority of members sign on. The open-ended rule would provide a vehicle to bring Mr. DeSaulnier’s bill to the floor and amend it with a Democratic proposal — which has yet to be written — to resolve the debt limit crisis.

The New York Times: Is the Debt Limit Constitutional? Biden Aides Are Debating It.

A standoff between House Republicans and President Biden over raising the nation’s borrowing limit has administration officials debating what to do if the government runs out of cash to pay its bills, including one option that previous administrations had deemed unthinkable.

That option is effectively a constitutional challenge to the debt limit. Under the theory, the government would be required by the 14th Amendment to continue issuing new debt to pay bondholders, Social Security recipients, government employees and others, even if Congress fails to lift the limit before the so-called X-date.

That theory rests on the 14th Amendment clause stating that “the validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

Some legal scholars contend that language overrides the statutory borrowing limit, which currently caps federal debt at $31.4 trillion and requires congressional approval to raise or lift.

Top economic and legal officials at the White House, the Treasury Department and the Justice Department have made that theory a subject of intense and unresolved debate in recent months, according to several people familiar with the discussions.

It is unclear whether President Biden would support such a move, which would have serious ramifications for the economy and almost undoubtedly elicit legal challenges from Republicans. Continuing to issue debt in that situation would avoid an immediate disruption in consumer demand by maintaining government payments, but borrowing costs are likely to soar, at least temporarily.

Read more at the NYT link.

More stories to check out today, links only:

The Guardian: Women to testify they can corroborate E Jean Carroll’s rape allegation against Trump.

The New York Times: Six Dead After Dust Storm Causes Crashes on Interstate 55 in Illinois.

Jamelle Bouie at The New York Times: The ‘Woke Mind Virus’ Is Eating Away at Republicans’ Brains.

Philip Bump at The Washington Post: Culture wars are lots of fun until you kneecap your economy.

The Washington Post: Bill would require disclosure of AI-generated content in political ads.

BBC News: AI ‘godfather’ Geoffrey Hinton warns of dangers as he quits Google.

NBC News: U.S. military is tracking another mysterious balloon.

AP: Loneliness poses risks as deadly as smoking, surgeon general says.

CNN: Trump to appear at CNN town hall in New Hampshire.

The Washington Post: Trump urges customers to drop AT&T to punish CNN over its coverage of him.

Vanity Fair: “Get Him Out of Here”: Donald Trump Tossed NBC Reporter’s Phones During Tirade Aboard Campaign Plane.

Have a great Tuesday, Sky Dancers!!