The US government is at risk of running out of money and defaulting on its debts by June 1 if it is not authorized to borrow more. This would mean it would be unable to pay for social programs, the military, and the national debt, which could cause chaos in world financial markets. The Republicans, who control the House of Representatives, are insisting on steep cuts to the federal budget before they will agree to extend the debt limit. However, the White House has made it clear that they will not negotiate on this issue. President Joe Biden has said he is willing to discuss a separate process to address budget cuts but that the debt ceiling issue must be set aside.
Congressional leaders have been invited to meet with Biden on May 9. Failure to reach an agreement would trigger a default and potential economic chaos, which could affect Biden’s re-election bid in 2024. Debt limit extensions are usually an uncontroversial annual accounting maneuver that allows the government to pay for extra expenses already incurred. However, Republicans are using the issue as leverage to reduce government spending and reduce the deficit. The House Republicans have passed a bill that extends the debt ceiling in return for steep spending cuts across an array of government programs.
The bill has virtually no chance of passing the Democratic-led Senate and would be vetoed by Biden. The White House sees the proposed Republican cuts as “unreasonable” and “dangerous.” The White House insists that it is Congress’ duty to prevent default, and it is the onus of Congress to get this done. The White House notes that Republicans in Congress had backed three annual debt limit extensions with little opposition when Donald Trump was president, so they ask, “What has changed?”