Representative Pramila Jayapal (D., Wash.) on Tuesday warned that leftist protesters will take to the streets if President Biden agrees to spending cuts as part of negotiations with Republicans to ward off a looming debt default.
“I think there would be a huge backlash from our entire House Democratic caucus, certainly the progressives, but also in the streets,” she said. “It’s important that we don’t take steps back from the very strong agenda that the president himself shepherded and led over the last years.”
Treasury Secretary Janet Yellen stated earlier this week that June 1 is the “hard deadline” for the U.S. to raise its debt ceiling or risk defaulting on its obligations.
“I indicated in my last letter to Congress that we expect to be unable to pay all of our bills in early June and possibly as soon as June 1,” Yellen said on NBC’s “Meet the Press.”
In April, House Republicans passed a bill to extend the government’s borrowing authority, but it also included spending cuts, reductions in the growth of the national debt, and work requirements for welfare. Throughout May, the Biden administration has insisted that the debt limit must be raised without any add ons, while Republicans have insisted they won’t raise the ceiling absent spending cuts.
House speaker Kevin McCarthy met with Biden on Monday at the White House and both parties indicated that while a deal had not yet been reached, talks were productive.
As of Friday, nearly every House Democrat had signed on to a plan to force a vote via a discharge petition on a “clean” increase that would not include any concessions to Republicans on spending. Biden recently proposed a debt-ceiling deal that claims to reduce the deficit by $3 trillion, but further examination indicates it increases taxes rather than cuts federal spending. As the stakes get higher, Biden may consider unilateral action to continue borrowing without the consent of Congress, though any such move would assuredly be met with a legal challenge as it infringes on Congress’s power of the purse.
In early May, a few moderate House Democrats urged Biden in a letter to “end the partisan standoff and brinkmanship before it rattles markets, damages our economy, and hurts the American people.” Senator Joe Manchin (D., W.Va.) in April slammed Biden for “deficiency of leadership” in stonewalling House Speaker Kevin McCarthy, when the GOP bill “is the only bill actually moving through Congress that would prevent default.”
As the June 1 deadline approaches, the U.S. risks receiving a downgrade on its debt from ratings agencies. Given America’s massive and growing debt to GDP ratio, some economists are arguing that its AA+ bond rating is due for a correction. The Congressional Budget Office projects that federal spending will be 23.7 percent of GDP this fiscal year, surpassing the 21 percent it was in 2019 before Covid.