Though President Joe Biden has long been adamant in his refusal to negotiate with Republicans with regard to raising the debt ceiling, The Hill reports that the White House is now signaling its openness to a short-term increase to avoid the potential economic fallout of a default.
Such an option will likely be up for discussion next week when Biden sits down with Republican House Speaker Kevin McCarthy (CA-20) after weeks of declining to do so.
According to The Hill, it was on Thursday that Shalanda Young, director of the White House Office of Management and Budget revealed that a debt ceiling increase of a short-term nature is something the president would consider.
“I'm sure one of the things on the table we will have to work through is how long. I'm not going to take anything off the table,” said Young.
The disagreement between the White House and Republican lawmakers centers largely on the latter's requirement that a debt ceiling increase be accompanied by significant spending cuts, whereas the former has demanded a “clean” increase without attendant conditions.
Pressed by reporters whether a short-term deal is a possibility Young stated, “Right now, remember where our debate is. We're in the take it or leave it phase,” apparently referencing the GOP's bargaining position.
House Republicans have already passed a measure to raise the debt ceiling – albeit on a year-to-year basis, which McCarthy says would also implement much-needed federal spending cuts and reign in executive power.
Biden, for his part, stands opposed to coupling the debt ceiling and spending concerns into the same negotiation, though Young maintained her hope that “we will find a path to avoid default.”
“I do believe the majority of members of Congress know that is the wrong path to go down. Look, we saw the partisan process play out, now we need to pivot to a bipartisan Congress,” Young explained.
Slamming the Republican bill over the spending cuts it includes, Young continued, “Congress can put a bill on the floor tomorrow, avoid default. The D.C. Drama, the political brinksmanship, that's what that is.”
In an attempt to stress the urgency of the situation and the need for swift agreement, the White House Council of Economic Advisers released a report Wednesday warning of “severe” economic damage and massive job losses in the event of a default.
CNBC reported that the White House detailed three potential scenarios that could unfold, depending on the duration of a stalemate leading to default.
One scenario involves ongoing “brinksmanship” up to the June 1 deadline for action suggested by the Treasury Department, and according to the White House, even that could cause 200,000 lost jobs.
A “brief” default of roughly a week would, the report declares, lead to roughly 500,000 lost jobs, while a “protracted” default of a quarter or longer could yield 8.3 million job losses, a 45% stock market decline, and a host of other ills that the federal government would be powerless to help address.
Even with talks set to take place next week, Biden has held firm in his stance that the debt ceiling should not be linked to Republican demands to slash spending and that it is the responsibility of Congress to ensure that default does not occur.
As CNBC noted separately, Biden said this week, “They're two separate issues – two. Let's get it straight: They're trying to hold the debt hostage for us to agree to some draconian cuts, magnificently difficult and damaging cuts. But unfortunately, they're threatening to undo all this progress by letting us default.”
Echoing the aforementioned prognostications of doom, Biden said a default could have a devastating effect on America's global standing and proclaimed that the United States is “not a deadbeat nation.”
The president and the four top Republican and Democratic leaders in Congress are poised to meet in the coming days, but whether they will emerge with a temporary deal or a continued stalemate, only time will tell.