Bipartisan negotiators propose linking debt limit to GDP as White House prepares to meet McCarthy

Bipartisan negotiators propose linking debt limit to GDP as White House prepares to meet McCarthy

top line

Rep. Brian Fitzpatrick (R-Penn.) said he is working with Rep. Josh Gottheimer (DN.J.) on a proposal that would set the federal government’s debt ceiling at a specific proportion of the nation’s total economic output. instead of a fixed limit. sum, marking signs of progress after the debt ceiling was breached last week and lawmakers began looking to prevent the government from defaulting on its debt.

key facts

The deal being negotiated by Fitzpatrick and Gottheimer, who co-chair the House’s Moderate Caucus of Problem Solvers, would trigger spending cuts if US debt.

Fitzpatrick expressed the importance of raising the debt ceiling and limiting the federal deficit as part of the negotiations, saying fox news sunday “When you have a child who has a spending problem, you do two things: you pay their bills and you take away their credit card.”

Fitzpatrick previously said that defaulting on debt, something that has never happened in US history and that most economists believe would be disastrous, was “off the table.”

Fitzpatrick previously said that defaulting on debt, something that has never happened in US history and that most economists believe would be disastrous, was “off the table.”

big number

124%. That’s the current debt-to-GDP ratio, according to the Treasury Department.. The debt-to-GDP ratio exceeded 100% for the first time in 2013, when both figures were around $16.7 trillion.

key background

Treasury Secretary Janet Yellen said Thursday that the United States had reached its federal borrowing limit of $31.4 trillion, triggering “extraordinary measures” to prevent a default, including suspending investments in the funds. retirement benefits for certain federal employees. Yellen estimated that those “extraordinary measures” would expire on June 5, depending on how much money the government raises in spring tax bills and other unpredictable revenue. If Congress does not raise the debt ceiling by then, the federal government will be unable to meet its obligations, leading to default. Republicans have expressed plans to demand spending cuts, or even policy changes, from the Biden administration in exchange for agreeing to raise the debt limit, but the White House has repeatedly said it will not negotiate on the issue. House Speaker Kevin McCarthy (R-Calif.) and President Joe Biden announced plans Friday to meet to discuss the debt limit, among a “range of issues as part of a series of meetings with all new congressional leaders to start the year. said press secretary Karine Jean-Pierre.

chief critic

Sen. Joe Manchin (DW.Va.) said Sunday it would be a “mistake” for the White House to refuse to negotiate with Republicans on the debt limit, but added that any cuts to Medicare and Social Security (somewhat that some Democrats fear Republicans might propose) “are not going to happen,” he said on the CNN show. state of the union Manchin also said he had agreed to meet with McCarthy to discuss a “way forward” in negotiating a debt limit increase, he told Fox Business. Sunday morning futures.

Against

Several Democrats expressed confidence in the negotiations Sunday, including Sen. Tim Kaine (Va.), who called Biden’s planned meeting with McCarthy to discuss raising the nation’s debt limit a “good thing,” while Gottheimer said that he was “optimistic” about the negotiations.

Other reading

Federal Government Officially Hits Debt Limit, Triggering ‘Extraordinary Measures’ To Avoid Default: Here’s What That Means (Forbes)

Debt Limit Showdown: How Upcoming Congressional Negotiations Could Play Out (Forbes)

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