President Joe Biden is under increasing pressure from business groups to negotiate with Speaker Kevin McCarthy on the US debt limit, a blow to the White House’s goal of avoiding talks with Republicans on raising it.
(Bloomberg) — President Joe Biden is under increasing pressure from business groups to negotiate with Speaker Kevin McCarthy on the US debt limit, a blow to the White House’s goal of avoiding talks with Republicans on raising it.
Some White House officials had wanted business groups to pressure McCarthy to take the possibility of a catastrophic debt default off the table. Such groups have traditionally held sway over Republican lawmakers, though their influence waned during Donald Trump’s presidency.
Instead, two of the biggest Washington business associations — the US Chamber of Commerce and Business Roundtable — broke the other way and said Biden should agree to talks after McCarthy won a narrow but important victory with House passage of a proposal to raise the borrowing cap in exchange for nearly $5 trillion in spending cuts.
The Chamber’s top lobbyist, Neil Bradley, said last week the administration should meet with congressional leaders “without delay” to find solutions on the debt limit and “runaway deficits.” Business Roundtable CEO Joshua Bolten said that the group hoped the House’s passage of the debt plan “will jump-start bipartisan negotiations on raising the debt ceiling as soon as possible.”
The question now is whether Biden will acquiesce and agree to talks with McCarthy after months of refusing to do so.
Donor Unease
Some Democratic donors have significant concerns the country could be headed to a default, said Allan Berliant, a Chicago-based fundraiser and contributor to the party. Those fears could add to pressure on the White House to figure out how and when to engage McCarthy.
Donors in Berliant’s circle believe McCarthy’s tenuous position — based on his razor-thin majority and complicated by the intransigent stances of some far-right Republicans — leaves the speaker little room to maneuver. If Biden and McCarthy cannot reach an agreement, donors worry the chaos and economic pain Americans experience as a result could spell peril for Biden.
“The fear is that Biden is going to get blamed because it happened under his watch,” Berliant said.
McCarthy defied predictions by gaining enough support for his plan from the fractious House GOP conference. While the bill stands no chance of passing the Democratic-controlled Senate, let alone becoming law, McCarthy contends that passage gives him room to demand Biden sit down with him on his terms.
“The only way that you can come to an agreement is if the other side has any ideas. I produced our plan. We proved we can pass it. Show me what yours is,” McCarthy said in a Bloomberg Television interview.
The president laughed off the proposal during a Saturday night speech at the White House Correspondents’ Dinner, comparing it to McCarthy’s struggle to get elected House speaker. “The last time Republicans voted on something that hapless, it took 15 tries,” Biden said.
Biden, who last met with McCarthy in February to discuss the debt ceiling, has said the speaker ruling out default remains his condition for restarting talks.
At an event for small business owners at the White House on Monday, Biden again said the GOP must take the threat of default off the table to “ensure the continued reliance of our economy and the financial system” and gave no indication he is moving to hold talks with McCarthy.
“The most important thing we have to do in that regard is to make sure the threat by the speaker of the House to default on the national debt is off the table,” Biden said. “We pay our bills. And should do so without reckless hostage-taking from some of the MAGA Republicans in Congress.”
The White House said business groups’ demands for talks had not changed its position and that companies would suffer immense damage if the US defaults on its debt.
“The best thing for businesses and the economy broadly would be for congressional Republicans to stop taking the economy hostage and avoid default, as they did three times under the last president,” spokesman Michael Kikukawa said in a statement.
The Biden administration has briefed business organizations on the consequences of default, and group members in those meetings have criticized Republicans’ demands for spending cuts as a condition for raising the debt limit, according to an administration official.
Inching to the Edge
The longer the White House waits, the closer the nation gets to the precipice of a default, an unprecedented event which could trigger a recession and damage the president’s 2024 reelection chances.
Goldman Sachs Group Inc. told clients the Treasury Department could be at risk of a payments default by the end of July if the debt limit is not raised, after projecting the date could be as early as June. The final date will depend on US tax receipts.
Biden has said the public should blame Republicans for a potential default and any economic fallout, pointing out that GOP presidents from Ronald Reagan to Trump raised the debt limit without conditions. He has also said McCarthy’s plan contains unpopular and damaging cuts to food assistance and veterans’ health-care programs, among other government initiatives.
Yet several rank-and-file House Democrats have questioned the president’s refusal to meet with the speaker, even as Democratic leaders have remained in lockstep with Biden.
“We should never say we’re not going to speak to folks across the aisle. I don’t think that’s a sustainable position,” Florida Representative Jared Moskowitz said last Friday on CNN.
Senate Minority Leader Mitch McConnell — Biden’s negotiating partner in the 2011 debt-ceiling crisis — isn’t handing the president a way out of his standoff with McCarthy by offering to reprise his role as negotiator.
“The cards have already been dealt. We have divided government. The president and the speaker need to come together and solve the problem,” McConnell said.
–With assistance from Bill Allison, Annmarie Hordern and Josh Wingrove.
(Updates with additional Biden comments in paragraphs 13-14.)
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