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After weeks of back and forth negotiations between Democratic President Biden and Republican House Speaker Kevin McCarthy, an agreement appears in reach to raise the nation’s debt ceiling limit to avoid global economic catastrophe.
The two sides are reportedly closing in on a deal to raise the nation’s $31.4 trillion debt ceiling for two years with a freeze on additional domestic spending, according to Reuters, who spoke with a U.S. official.
The tentative deal would increase funding for discretionary (non-mandatory) spending on military and veterans while keeping other discretionary domestic spending at current-year levels, according to the official who asked to remain anonymous.
The debt ceiling deal is not final, and both sides continue to negotiate as the U.S. approaches an early June deadline to raise the nation’s debt or face economic turmoil.
If the nation goes past June 1 without an agreement, “There will be some obligations we will be unable to pay,” U.S. Treasury Secretary Janet Yellen said on Monday.
The debt limit is the “total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments,” according to the U.S. Department of the Treasury.
What do both sides want out of a deal on raising the debt ceiling?
The nation has never defaulted on its death, and the White House has warned that even coming close to a default would have widespread negative impacts on financial markets.
The center of the party-line negotiations over raising the debt ceiling involve House Republicans’ desire to slash spending on social programs that impact the most marginalized Americans. They also want to tighten restrictions on federal aid by expanding work requirements before someone can receive support from programs like Medicaid and the Supplemental Nutrition Assistance Program, or SNAP, a food assistance program, NBC News reported. Republicans are also open to lowering funding for federal Pell grants, Black and Latino Americans disproportionately require in order to pay for college.
“I’m staying in DC to fight for an agreement that’s worthy of the American people—for as long as it takes. I will continue the fight to curb inflation, stop reckless spending, make our economy stronger, and end our dependence on China,” House Speaker Kevin McCarthy tweeted on Thursday.
For his part, President Biden has stated he will not decrease funding for essential safety net programs but has signaled willingness to lower the nation’s debt by raising taxes on the wealthy and eliminating tax breaks for oil and gas companies.
According to the U.S. official who spoke with Reuters, the two sides are “just $70 billion apart on a total figure that would be well over $1 trillion.”
On Monday, the same night a teenager rammed into barriers near the White House, Speaker McCarthy met with Biden at the Oval Office to discuss the debt ceiling. The two frozen proposals appeared to thaw toward an agreement.
“We reiterated once again that default is off the table and the only way to move forward is in good faith toward a bipartisan agreement,” Biden said.
NAACP warns compromising on social programs will hurt Black Americans
While the talks are moving closer to a finalized agreement on raising the nation’s debt ceiling, the oldest civil rights organization has warned that caving to Republicans’ demands to restrict spending on social safety net programs would be a dire decision for Black Americans.
NAACP President Derrick Johnson blasted Speaker McCarthy’s plan to raise the debt ceiling in a letter sent to Congress and shared by NBC News last week.
“These proposals play on racist stereotypes masquerading as sound policy,” Derrick Johnson told Congress in the open letter.
“Do not accept the false choice between triggering an utterly avoidable economic catastrophe driven by politicians; or imposing costs and new harms on Black communities,” he added. “We need deeper federal investments — not cuts — to ensure all Americans can thrive.”
Presenting one of the biggest challenges for his presidency, and less than a year away from the beginning of the presidential campaign, Biden must avoid financial collapse while maintaining funding for the programs that support many of the people who elected him to office.
“The nation, especially Black America, is watching,” NAACP President Johnson wrote.