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    Biden and McCarthy to Discuss Debt Limit as a Possible Default Looms

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    The president will host the House speaker and other congressional leaders at the White House on Tuesday to discuss their impasse over the debt ceiling and spending cuts.WASHINGTON — President Biden will meet with Speaker Kevin McCarthy at the White House on Tuesday in a critical face-to-face confrontation that will frame their showdown over the federal debt and spending in the weeks before the nation is set to default on its obligations for the first time in history.With the American and perhaps the global economy hanging in the balance, the meeting will be the first sit-down session between the Democratic president and Republican speaker since February. But even the terms of the discussion are in dispute: Mr. McCarthy insists the president negotiate a debt ceiling deal with him, while Mr. Biden insists the meeting will just be an opportunity to tell the speaker that there will be no negotiations over the limit.The meeting in the Oval Office will feature Mr. Biden, Mr. McCarthy and three other congressional leaders: Representative Hakeem Jeffries of New York, the Democratic leader in the House, and Senators Chuck Schumer of New York and Mitch McConnell of Kentucky, the Democratic and Republican leaders in the Senate. But Mr. Biden and Mr. McCarthy are the key players, locked in a political game of chicken to see who will blink first on raising the debt ceiling.With the federal government expected to default on its debt as soon as June 1 without an agreement, Mr. McCarthy and his Republican caucus have refused to raise the debt ceiling without commitments to major spending cuts. Mr. Biden has said he would discuss ways to reduce the deficit but has refused to link any spending decisions to the debt ceiling increase, arguing that Congress should simply raise the ceiling as it has for generations to pay for spending already approved.Karine Jean-Pierre, the White House press secretary, repeatedly referred to Mr. Biden’s meeting with Mr. McCarthy on Tuesday as a “conversation” rather than negotiations.Pete Marovich for The New York Times“We should not have House Republicans manufacturing a crisis on something that has been done 78 times since 1960,” Karine Jean-Pierre, the White House press secretary, said on Monday. “This is their constitutional duty. Congress must act. That’s what the president is going to make very clear with the leaders tomorrow.”The meeting that Mr. Biden has called, she added, will not involve any haggling over the debt ceiling. “I wouldn’t call it ‘debt ceiling negotiations,’” she said in reply to a reporter who used that phrase. “I would call it a conversation.” In fact, she was so intent on calling it a “conversation” that she used the word to describe the meeting 15 times during her briefing.Neither side expects any breakthrough at the session, scheduled for 4 p.m., but instead the leaders plan to use it to emphasize their positions in the dispute, in effect setting the parameters for the debate that will play out over the next few weeks. In recent years, such standoffs have not been resolved until the final hours and days before a deadline — or the deadline is extended.Mr. Biden has indicated that he is willing to have a separate discussion with Mr. McCarthy and the Republicans over spending that is not directly linked to the debt ceiling legislation. White House officials said the president plans to push Republicans to consider the tax increases and prescription drug savings he laid out in his most recent budget, which would reduce deficits by an estimated $3 trillion over 10 years, as part of a larger package to reduce debt accumulation over time.He is likely to challenge Republicans in Tuesday’s meeting to be more specific in the spending they would cut. He has hammered them for more than a week over the potential consequences — like reduced funding for veterans’ health services — that could result from the discretionary spending caps they included in a debt ceiling bill that passed the House late last month.Republicans have bristled at the president’s attacks on their legislation, calling them misleading. But they noted that unlike the Democrats, they at least have passed a measure to raise the debt ceiling, albeit conditioned on spending cuts. They argued that Mr. Biden and his Democratic allies have to come to the table with a counterproposal. Otherwise, they maintain, it would be the Democrats, not the Republicans, who failed to raise the debt ceiling, leading to a possible default.“They have to now step up and act like responsible leaders,” Representative Jodey C. Arrington, a Republican from Texas and the chairman of the House Budget Committee, said on CNBC on Monday. “We’ve done that, and we have set that example, and we have placed in their hands a list of proposals that we have gotten consensus on. It’s their time to respond, and the American people expect them to.” More

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    What Options Biden Has in the Debt Limit Crisis

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    The president has not wavered in his calls for Republicans to raise the nation’s borrowing limit without condition. Privately, his aides have discussed other paths.The federal government has perhaps less than a month left before an economically devastating default on its debt.No matter who bears the political blame for a default, aides acknowledge that President Biden has a lot to lose if the nation tips into recession just as he is moving into his re-election campaign.Mr. Biden has several strategic options as he tries to prevent that from happening. All have been the subject of discussions inside the administration and with Democratic allies in recent weeks. They range from continuing to hold out for Republicans to raise the nation’s debt limit with no strings attached to preparing unilateral action to effectively bypass the limit and keep paying the nation’s bills.Some involve negotiations with Republican leaders, which Mr. Biden will insist are not related to the debt limit even though they would be.Each path carries risks, which administration officials acknowledge privately. The biggest by far is economic calamity: White House economists warned in an analysis released on Wednesday that if the country defaulted on its debt and that default continued for several months, the economy would shed eight million jobs as it entered recession.The economists also warned that merely approaching a possible default would rattle markets and drive up borrowing costs across the economy, “inhibiting firms’ ability to finance themselves and engage in the productive investment that is essential for extending the current expansion.”Here are the paths available to Mr. Biden, as his aides and allies see them.Stay the courseMr. Biden has insisted for months that lawmakers must raise the nation’s borrowing cap with no conditions attached, saying that it simply allows the United States to pay for spending Congress has already authorized. He could continue to do so, refusing to negotiate, as many progressives have urged him to do.It would be an attempt to stare down House Republicans, who last week passed a bill pairing an increase in the limit with cuts to federal spending and a reversal of Mr. Biden’s climate agenda. Mr. Biden would effectively be daring Speaker Kevin McCarthy of California to allow the government to run out of cash to pay its bills on time, which the Treasury Department estimates could happen as soon as June 1.The risk is that Mr. McCarthy refuses to give in, pointing to the House bill as evidence that Republicans had done enough to raise the debt limit. Mr. Biden would count on pressure from business groups and turmoil in financial markets to push Republicans to blink at the last moment and at least pass a bill to avoid default for a few weeks or months. But as of now, House Republicans have shown no willingness to pass such a bill, known as a “clean” debt-limit increase. Neither have a critical mass of Senate Republicans needed to advance the bill in that chamber.Shalanda Young, the White House budget director, said, “I have hope that we will find a path to avoid default.”Pete Marovich for The New York TimesNegotiate spending cuts not tied to the debt limitMr. Biden will welcome Mr. McCarthy and other congressional leaders to the White House next week for talks about fiscal policy — how much the nation taxes, spends and borrows. The president says those talks are divorced from the debt limit, but effectively, they are not.The deadline hanging over the talks is the so-called X-date, estimated for June 1; Mr. Biden’s invitation to congressional leaders was accelerated by the revised projections of when that date will hit. In contrast, the bill funding federal government operations, which Mr. Biden signed late last year, runs through the end of September.Mr. Biden could negotiate without “negotiating” by trying to broker an early agreement on spending levels for the next fiscal year, before the X-date. In exchange, Mr. McCarthy would commit to passing a clean extension of the debt limit.Business groups and even some administration officials expect any deal of that nature to center on limits on federal discretionary spending — though almost certainly not as stringent as the ones in the bill Republicans have passed. White House officials have said privately for months that they do not expect the House to approve significant spending increases for next year anyway, so some sort of limits may prove palatable to Mr. Biden, depending on the details.The risk of that strategy is that Mr. McCarthy’s most conservative members have shown no appetite for a deal of that scope. Mr. Biden will not accept those members’ more sweeping demands. That complicates the prospects for an agreement that runs through the speaker.Speaker Kevin McCarthy pointed to the bill the House passed last week as evidence that Republicans had done enough to raise the debt limit.Kenny Holston/The New York TimesBypass McCarthyMr. Biden could try to bypass the speaker and court a handful of moderate Republicans in the House and the Senate to vote to raise the limit, offering some fiscal concessions as an enticement. Bringing such a deal to the House floor could require some legislative maneuvering, like the so-called discharge petition Democrats have been keeping at the ready for months.It could also require a different approach from Mr. Biden to the congressional Republicans he needs to pass such a bill. Moderate Republicans in the House say they are receiving little friendly outreach from the White House so far. Instead, Biden administration officials have gleefully hammered them for voting to advance the Republican debt-limit bill and its deep spending cuts.This week administration officials have posted, again and again, the headshots and names of House Republicans on Mr. Biden’s official Twitter account, accusing them of voting to cut funding to veterans’ programs and Meals on Wheels. Two of the featured lawmakers were members of leadership, including Mr. McCarthy. Two others were high-profile, far-right congresswomen. The remainder — more than two dozen — were lawmakers in seats Mr. Biden won in 2020.Officials have defended that strategy. “I have hope that we will find a path to avoid default,” Shalanda Young, the White House budget director, told reporters on Thursday, after assailing budget cuts included in the Republican bill. “But it’s our job to keep coming to you, to go to the American people, and make sure people understand what this debate is about.”Go it aloneIf Mr. Biden’s chosen tactics do not produce a bill he will sign that raises the debt limit before the X-date, the president will have to choose between allowing the nation to default or pursuing what is effectively a constitutional challenge to the debt ceiling by continuing to borrow to pay the bills when the government runs out of cash.That challenge would be rooted in a clause in the 14th Amendment that stipulates that the government must pay its debts. Administration officials have debated that idea, with no resolution, for months. But even its proponents concede that it would not be a perfect solution. The move would draw an immediate court challenge and sow at least temporary uncertainty in the bond market, sending government borrowing costs soaring.Catie Edmondson More

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    House Democrats Move to Force a Debt-Limit Increase as Default Date Looms

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    House Democratic leaders who have been quietly planning a strategy to force a debt ceiling increase to avert default began taking steps on Tuesday to deploy their secret weapon.The only clue to the gambit was in the title of the otherwise obscure hodgepodge of a bill: “The Breaking the Gridlock Act.”But the 45-page legislation, introduced without fanfare in January by a little-known Democrat, Representative Mark DeSaulnier of California, is part of a confidential, previously unreported, strategy Democrats have been plotting for months to quietly smooth the way for action by Congress to avert a devastating federal default if debt ceiling talks remain deadlocked.With a possible default now projected as soon as June 1, Democrats on Tuesday began taking steps to deploy the secret weapon they have been holding in reserve. They started the process of trying to force a debt-limit increase bill to the floor through a so-called discharge petition that could bypass Republican leaders who have refused to raise the ceiling unless President Biden agrees to spending cuts and policy changes.“House Democrats are working to make sure we have all options at our disposal to avoid a default,” Representative Hakeem Jeffries, Democrat of New York and the minority leader, wrote in a letter he sent to colleagues on Tuesday. “The filing of a debt ceiling measure to be brought up on the discharge calendar preserves an important option. It is now time for MAGA Republicans to act in a bipartisan manner to pay America’s bills without extreme conditions.”An emergency rule Democrats introduced on Tuesday, during a pro forma session held while the House is in recess, would start the clock on a process that would allow them to begin collecting signatures as soon as May 16 on such a petition, which can force action on a bill if a majority of members sign on. The open-ended rule would provide a vehicle to bring Mr. DeSaulnier’s bill to the floor and amend it with a Democratic proposal — which has yet to be written — to resolve the debt limit crisis.The strategy is no silver bullet, and Democrats concede it is a long shot. Gathering enough signatures to force a bill to the floor would take at least five Republicans willing to cross party lines if all Democrats signed on, a threshold that Democrats concede will be difficult to reach. They have yet to settle on the debt ceiling proposal itself, and for the strategy to succeed, Democrats would likely need to negotiate with a handful of mainstream Republicans to settle on a measure they could accept.A handful of hard-right Republicans explicitly warned their colleagues on Tuesday not to go down that path. “House Republicans: don’t defect!” Senator Mike Lee of Utah wrote on Twitter.Still, Democrats argue that the prospect of a successful effort could force House Republicans into a more acceptable deal. And Treasury Secretary Janet L. Yellen’s announcement on Monday that a potential default was only weeks away spurred Democratic leaders to act.House Democratic leaders have for months played down the possibility of initiating a discharge petition as a way out of the stalemate. They are hesitant to budge from the party position, which Mr. Biden has articulated repeatedly, that Republicans should agree to raise the debt limit with no conditions or concessions on spending cuts.But behind the scenes, they were simultaneously taking steps to make sure a vehicle was available if needed.There were no signs on Tuesday of any momentum toward even a temporary resolution. Senator Chuck Schumer, Democrat of New York and the majority leader, brushed aside the idea of putting off a confrontation by passing a short-term debt limit increase, telling reporters: “We should not kick the can down the road.”And Senator Mitch McConnell, Republican of Kentucky and the minority leader, reiterated that he intended to leave the negotiations to Mr. Biden and Speaker Kevin McCarthy, again dashing the private hopes of some Democrats that the veteran Republican would ultimately cut a deal with them to allow the debt ceiling to be lifted, as he has done in the past.“There is no solution in the Senate,” Mr. McConnell said.The White House had no public comment on the discharge effort, according to Karine Jean-Pierre, the press secretary. Mr. Biden is scheduled next week to host Mr. McCarthy and other congressional leaders at the White House to discuss raising the debt limit. His goal at that meeting, a senior administration official said, will be to stress the importance of averting default and creating a separate negotiation to address other budget issues.The discharge petition process can be time-consuming and complicated, so House Democrats who devised the strategy started early and carefully crafted their legislative vehicle. Insiders privately refer to the measure as a “Swiss Army knife” bill — one intended to be referred to every single House committee in order to keep open as many opportunities as possible for forcing it to the floor.It would create a task force to help grandparents raising grandchildren, create a federal strategy for reducing earthquake risks, change the name of a law that governs stock trading by members of Congress, extend small business loans, protect veterans from the I.R.S., authorize a new Pentagon grant program to protect nonprofit organizations against terrorist attacks and more. The legislation was so broad and eclectic that it was referred to 20 committees, where it has sat idle for months. That was the point.Mr. DeSaulnier’s intent was never to pass the elements of the bill, though he favors them all. It was to create what is known on Capitol Hill as a shell of a bill that would ultimately serve as the basis for a discharge petition — and a way out of the debt limit standoff.“I wrote it in a way to be prepared,” said Mr. DeSaulnier, a former member of the Rules Committee who worked with Democratic procedural experts to craft legislation that could provide a debt-limit escape hatch. “I anticipated there would be these problems with the Republican caucus, whether it was abortion or the debt limit. I think it was the responsible thing as a legislator to do.”Democrats say the beauty of Mr. DeSaulnier’s bill — which Republicans have ignored — is that it long ago passed the threshold of being held in committee for at least 30 days, the minimum length of time to initiate a discharge petition to force action on legislation. Even so, in a memo sent to members on Tuesday, a U.S. Chamber of Commerce analysis projected that even if Democrats were able to draw enough support for their plan and advance it without further delay, the measure could take until June 12 or 13 to clear Congress — many days beyond the earliest date Ms. Yellen has warned the debt limit could be reached.Democrats said the fact that their bill would fall under the jurisdiction of so many committees gave them several options for moving forward.Mr. DeSaulnier was picked to sponsor the measure because his low profile meant there was likely to be little attention to his bill. In contrast, any legislation introduced by Representative Jim McGovern of Massachusetts, the ranking Democrat on the Rules Committee, would have drawn attention immediately, and Republicans might have been able to take action to derail it.Discharge petitions have spurred action in the past by prompting House leaders to move on issues rather than lose control of the floor through a guerrilla legislative effort. But the procedure is rarely successful and has produced a law in only a handful of cases, including the approval of major bipartisan campaign finance legislation in 2002. Congressional leaders of both parties have been disdainful of such efforts, since they effectively wrest control of the House floor from the majority.Democrats say that the current situation, with a default looming, showed that they were taking prudent precautions with Mr. DeSaulnier’s bill. Besides thwarting gridlock, the legislation says its purpose is also “to advance common-sense policy priorities.”Catie Edmondson More

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    The Debt Ceiling Debate Is About More Than Debt

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    Republicans’ opening bid to avert economic catastrophe by raising the nation’s borrowing limit focuses more on energy policy than reducing debt.WASHINGTON — Speaker Kevin McCarthy of California has repeatedly said that he and his fellow House Republicans are refusing to raise the nation’s borrowing limit, and risking economic catastrophe, to force a reckoning on America’s $31 trillion national debt.“Without exaggeration, America’s debt is a ticking time bomb that will detonate unless we take serious, responsible action,” he said this week.But the bill Mr. McCarthy introduced on Wednesday would only modestly change the nation’s debt trajectory. It also carries a second big objective that has little to do with debt: undercutting President Biden’s climate and clean energy agenda and increasing American production of fossil fuels.The legislation, which Republicans plan to vote on next week, is meant to force Mr. Biden to negotiate over raising the debt limit, which is currently capped at $31.4 trillion. Unless the cap is lifted, the federal government — which borrows huge sums of money to pay its bills — is expected to run out of cash as early as June. The House Rules Committee said on Friday that it will meet on Tuesday to consider the bill and possibly advance it to a floor vote.More than half the 320 pages of legislative text are a rehash of an energy bill that Republicans passed this year and that aimed to speed up leasing and permitting for oil and gas drilling. Republicans claim the bill would boost economic growth and bring in more revenue for the federal government, though the Congressional Budget Office projected it would slightly lose revenue.The Republican plan also gives priority to removing clean energy incentives that were included in Mr. Biden’s signature climate, health and tax law. That legislation, known as the Inflation Reduction Act, included tax credits and other provisions meant to encourage electric vehicle sales, advanced battery production, utility upgrades and a variety of energy efficiency efforts.The proposal does include provisions that would meaningfully reduce government spending and deficits, most notably by limiting total growth in certain types of federal spending from 2022 levels.The bill would claw back some unspent Covid relief money and impose new work requirements that could reduce federal spending on Medicaid and food assistance. It would block Mr. Biden’s proposal to forgive hundreds of billions of dollars in student loan debt and a related plan to reduce loan payments for low-income college graduates.As a result, it would reduce deficits by as much as $4.5 trillion over those 10 years, according to calculations by the Committee for a Responsible Federal Budget in Washington. The actual number could be much smaller; lawmakers could vote in the future to ignore spending caps, as they have in the past.Even if the entire estimated savings from the plan came to pass, it would still leave the nation a decade from now with total debt that was larger than the annual output of the economy — a level that Mr. McCarthy and other Republicans have frequently labeled a crisis.The Republican plan is estimated to reduce that ratio — known as debt-to-G.D.P. — in 2033 by about nine percentage points if fully enacted. By contrast, Mr. Biden’s latest budget, which raises trillions of dollars in new taxes from corporations and high earners and includes new spending on child care and education, would reduce the ratio by about six percentage points.Those reductions are a far cry from Republicans’ promises, after they won control of the House in November, to balance the budget in 10 years. That lowering of ambitions is partly the product of Republican leaders’ ruling out any cuts to the fast-rising costs of Social Security or Medicare, bowing to an onslaught of political attacks from Mr. Biden.The lower ambitions are also the result of party leaders’ unwillingness or inability to repeal most of the new spending programs Mr. Biden signed into law over the first two years of his presidency, often with bipartisan support.At the New York Stock Exchange on Monday, Mr. McCarthy accused the president and his party of already adding “$6 trillion to our nation’s debt burden,” ignoring the bipartisan support enjoyed by most of the spending Mr. Biden has signed into law.The speaker’s plan would effectively roll back one big bipartisan spending bill, which Mr. Biden signed at the end of 2022 to fund the government through this year. But the other big drivers of debt approved under Mr. Biden that are not singled out for repeal in the Republican bill include trillions in new spending on semiconductor manufacturing, health care for veterans exposed to toxic burn pits, and upgrades to critical infrastructure like bridges, water pipes and broadband.Some of that spending could potentially be reduced by congressional appropriators working under the proposed spending caps, but much of it is exempt from the cap or already out the door. Most of the $1.9 trillion economic aid plan Mr. Biden signed in March 2021, which Republicans blame for fueling high inflation, is already spent as well.The plan squarely targets the climate, health and tax bill that Democrats passed along party lines last summer by cutting that bill’s energy subsidies. It would also rescind additional enforcement dollars that the law sent to the Internal Revenue Service to crack down on wealthy tax cheats. The Congressional Budget Office says that change would cost the government about $100 billion in tax revenue.Taken together, those efforts reduce deficits by a bit over $100 billion, suggesting debt levels are not the primary consideration in targeting those provisions. The bill’s next 200 pages show what actually is: a sustained push to tilt federal support away from low-emission energy and further toward fossil fuels, including mandating new oil and gas leasing on federal lands and reducing barriers to the construction of new pipelines.Republicans say those efforts would save consumers money by reducing gasoline and heating costs. Democrats say they would halt progress on Mr. Biden’s efforts to galvanize domestic manufacturing growth and fight climate change.The plan “would cost Americans trillions in climate harm,” said Senator Sheldon Whitehouse of Rhode Island, the Democratic chairman of the Budget Committee. “And it would shrink our economy by disinvesting in the technologies of tomorrow.”Republicans have positioned their fossil fuel efforts as a solution to a supposed production crisis in the United States. “I have spent the last two years working with the other side of the aisle, watching them systematically take this country apart when it comes to our natural resources,” Representative Jerry Carl of Alabama said last month before voting to pass the energy bill now embedded in the debt ceiling bill.Government statistics show a rosier picture for the industry. Oil production in the United States has nearly returned to record highs under Mr. Biden. The Energy Department projects it will smash records next year, led by output increases from Texas and New Mexico. Natural gas production has never been higher.White House officials warn that Republicans are risking a catastrophic default with their demands attached to raising the borrowing cap. “The way to have a real negotiation on the budget is for House Republicans to take threats of default, when it comes to the economy and what it could potentially do to the economy, off the table,” Karine Jean-Pierre, the White House press secretary, told reporters on Thursday.Mr. McCarthy has defended his entire set of demands as a complete package to reorient economic policy. But he mentioned energy only in passing in his speech to Wall Street.The issue he called a crisis — and the basis he cited for refusing to raise the borrowing limit without conditions — was fiscal policy and debt. Debt limit negotiations, he said, “are an opportunity to examine our nation’s finances.” More

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    Can Congress Use an Archaic Process to Get Around the Debt Stalemate?

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    Some Democrats are urging their colleagues to lay the groundwork for using an arcane procedural process to bypass Republicans and stave off economic peril.WASHINGTON — Call it an escape valve, an off-ramp or a break-glass-in-case-of-emergency option.From Pennsylvania Avenue to Wall Street to Main Street, those anxious about the political impasse over raising the federal debt limit are eying an arcane, seldom successful congressional process known as a discharge petition as a possible solution to ward off a disastrous default.The petition is just what its name implies: a signed demand, in this case bearing the signatures of a majority of the House, that can force consideration on the floor of a certain piece of legislation. The demand would be an increase in the federal debt limit — a way of staving off disaster if House Republicans refuse to agree to raise it before the Treasury Department exhausts its legal authority to borrow to pay its creditors this summer.But the process is exceedingly difficult, time-consuming and easily derailed. It has been successful only rarely in recent decades, most notably with passage of a campaign finance overhaul in 2002.That high degree of difficulty — and the economic threat posed by a federal default — has some Democrats urging their colleagues in the House to, at minimum, begin the process soon. They see it as a safeguard in the event that dormant debt talks between President Biden and Speaker Kevin McCarthy deteriorate further and the country finds itself on the brink of economic peril with no end in sight this year.Even if Congress does not ultimately need the discharge petition, they argue, lawmakers should get the ball rolling just in case — and soon.“I do think it is important to lay the groundwork for a discharge petition because it is a complicated process, so you need to plan ahead — meaning now,” said Senator Chris Van Hollen of Maryland, the former top Democrat on the House Budget Committee. “Having a backup would be a good strategy and, if necessary, would put pressure on House Republicans.”Executing a discharge petition is convoluted and politically dicey. It is a deliberately arduous exercise because it is intended to wrest control of the House floor from the majority leadership — an outcome that neither party wants to encourage on a regular basis. Since it is typically a tool of the minority, it requires wooing some members of the majority to defy their leadership and cross party lines to sign on. To force a debt limit vote, Democrats would need the support of all their members, as well as at least five Republican defectors.It is also a drawn-out process. The legislation at issue must sit in committee at least 30 legislative days — days the House is in session — before a petition to push it forward can be submitted. Then it can be brought to the floor only on specially designated days if its sponsors have the required 218 signatures.Mr. Van Hollen estimates that legislation introduced when Congress returns from recess on April 17 would not reach the point where its backers could even begin collecting signatures on a petition until June 21. It would still have a long way to go after that. The most recent prediction of when the debt ceiling will be breached is sometime between July and September.Lawmakers also noted that the House speaker can erect many procedural obstacles. For a discharge petition to succeed, they say, it is best if the speaker — in this case, Mr. McCarthy — tacitly wants the legislation to pass or is at least not adamantly opposed. In a crisis situation, as the debt limit endgame is likely to be, a discharge petition might be too cumbersome if the House leaders dug in against it.Speaker Kevin McCarthy insists Republicans will raise the debt ceiling only if President Biden and Democrats agree to spending cuts and other conditions.Al Drago for The New York Times“Look, I wouldn’t rule it out,” Representative Brendan F. Boyle of Pennsylvania, the top Democrat on the Budget Committee, said in a recent interview. But he warned that “it is really hard to do.”“Basically, in real time it works out to about two-and-a-half to three months,” said Mr. Boyle, who in the coming weeks plans to introduce legislation overhauling the debt limit process, allowing the president to raise it unless overridden by Congress. That measure could conceivably provide a basis for a discharge petition, as could other bills.Yet Democratic leaders in the House and Senate have been publicly resistant to the idea so far, mainly because they want to keep pressure on Republicans to raise the debt ceiling without conditions, as they did several times during the Trump administration without any upheaval.Mr. McCarthy and other Republican leaders insist they will raise the cap only if Mr. Biden and Democrats agree to spending cuts and other conditions — a demand that they have so far refused.Representative Hakeem Jeffries of New York, the Democratic leader, has steered clear of discharge petition discussions. Senator Chuck Schumer, Democrat of New York and the majority leader, said recently that he had no problem with readying a discharge petition but that he anticipates it will not be necessary because Democrats are succeeding in their push to box in Republicans on the issue, forcing a resolution.Other Democrats privately worry that embracing a discharge petition could backfire politically next year, allowing Republicans to paint them as employing a legislative trick to raise the debt limit over the objections of most Republicans.The concept of a discharge petition originated in the early 20th century as a way to circumvent the powerful Republican speaker at the time, Joseph Cannon. The rules have been revised multiple times, including in 1993, to make public a running tally of those who have signed.While petitions are not often successful, the prospect of one gaining enough support has forced action on major issues such as civil rights, immigration and gun rights.While Democrats have held back on initiating a petition, the possibility of one has helped calm nerves on Wall Street as bankers survey the potential outcomes of the debt limit struggle.Many economists at banks and consultancies acknowledged from the start that it was a long shot; Deutsche Bank pointed out that it was “rarely used,” and Morgan Stanley warned that it “may not be viable.”Still, it was regularly painted as an avenue out of the crisis, if an unlikely one: A discharge petition was “hardly a panacea, but it is in play,” Chris Krueger at the research group TD Cowen wrote in a research note in early January.But the possibility that it could be at all practical as a workaround is rapidly waning.“I’ve never thought the discharge petition was nearly as elegant a solution as made out by some,” Mr. Krueger said in an interview. He said he thought at this stage Congress would let negotiations get down to the wire and come to an agreement only when backlash in the news media or the financial markets became severe.“I don’t think we get into technical default scenarios,” he said, “but I think it’s going to get very uncomfortable.”Mr. Boyle said the real solution was not a discharge petition but the plan that he and other Democrats supported to remove the regular clashes over the debt limit from the congressional arena.“We have to structurally change this once and for all, because this is too dangerous a weapon to keep alive in our political system,” he said.“The future of the Republican Party is more Marjorie Taylor Greene than Mitt Romney,” Mr. Boyle added, naming the far-right congresswoman from Georgia and the more mainstream senator from Utah. “And so if we don’t permanently fix this process now, we’re going to be right back in this in a couple of years — and it might even be worse.” More

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    Double-Barreled Economic Threat Puts Congress on Edge

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    Republicans and Democrats disagree over how recent bank closures should impact the debt limit stalemate, and have taken divergent lessons from past economic crises.WASHINGTON — In 2008, an imminent collapse of the banking system consumed Congress before lawmakers delivered a bailout. Three years later, a debt limit crisis enveloped Washington and led to a series of spending cuts after a dangerous brush with default and a first-ever downgrade in the nation’s credit rating.Now unease about the banking system’s stability and a stalemate over raising the debt limit are engulfing the capital simultaneously, ratcheting up an already high level of financial anxiety as two economic challenges Congress has experienced before become intertwined.“The stakes are exceptionally high when you are dealing with what amounts to a one-two punch of economic peril,” said Senator Ron Wyden, Democrat of Oregon and chairman of the Senate Finance Committee. “The messages that you send to the economy and the public with respect to banking and the full faith and credit of the United States — it doesn’t get more consequential than that.”Republicans and Democrats acknowledge it is a scary case of déjà vu times two. But they diverge sharply on how recent bank failures — and uncertainty over how Congress should respond to them, if at all — will influence the debt limit fight later this summer.At their just-concluded retreat in Florida, House Republicans took the line that shakiness in the banking system should strengthen their hand in the coming showdown over the debt limit. They argued that a Democrat-led spending spree spurred inflation, forced up interest rates and led to a precarious situation for all but the largest banks. The clear answer, to them, remains deep spending cuts, and they say they will still insist on cuts before making any move to raise the debt ceiling.Treasury Secretary Janet L. Yellen said on Tuesday that the president was willing to talk federal spending with Republicans, just not under the threat of a debt default.Pete Marovich for The New York Times“That should wake everybody up,” Speaker Kevin McCarthy, Republican of California, told reporters on Tuesday when asked about the intersection of banking stability and the debt limit. “Why are we having a crisis? Because the government spent too much and created inflation.”“I believe to get to a debt ceiling limit, you have to be spending less than we spent before,” he said.But Jerome H. Powell, the Fed chair, on Wednesday disputed the notion that spending remained the chief driver of inflation.“Spending was of course tremendously high during the pandemic,” he said at a news conference announcing an increase in interest rates. “As pandemic programs rolled off, spending actually came down.”“Fiscal impulse is actually not what’s driving inflation right now,” he said. “It was at the beginning perhaps, but that’s not the story right now.”Democrats say House Republicans are doing the exact opposite of what is required at a critical moment, even as the Fed offers assurances about the soundness of the banking system. They say the fallout from any banking instability should persuade Republicans that the last thing the economy needs is the specter of a default from a failure to raise the debt limit, which is projected to be reached as early as July without action by Congress.Senator Chuck Schumer, Democrat of New York and the majority leader, on Wednesday assailed the Republican stance as “reckless and truly clueless.”.css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.“Instead of calling for calm, House Republicans are sowing chaos by threatening a default at a time when banks need stability,” he said. “The right answer is for Republicans in the House to stop saber-rattling, drop the hostage-taking and brinkmanship and work together, work in a bipartisan way, to extend the debt ceiling without strings attached.”Other Democrats shared those sentiments, dismissing calls from some Republicans to prioritize federal payments should Congress fail to agree on a debt-limit increase. They say that approach is unworkable and default by another name.“The banking crisis highlights the importance of paying our bills on time,” said Senator Chris Van Hollen, Democrat of Maryland and a member of the Banking Committee. “We don’t want to create any more uncertainty in the financial markets and the economy. Because of what happened with the banks, it is more important than ever that Republicans don’t allow us to get close to the cliff.”“Because of what happened with the banks, it is more important than ever that Republicans don’t allow us to get close to the cliff,” said Senator Chris Van Hollen, Democrat of Maryland.Pete Marovich for The New York TimesThe 2008 and 2011 economic crises were earthshaking events on Capitol Hill. In the fall of 2008, in response to warnings from Treasury and Fed officials that the nation’s banks were about go under, Congress dove into a titanic, market-rattling debate over the $700 billion Troubled Asset Relief Program, ultimately approving a historic government intervention in the economy.Three years later, a new House Republican majority and the Obama administration took their clash over spending to the brink of financial ruin, bringing the country close to a federal default before striking a last-minute deal on spending cuts cleared the way for an increase in the debt ceiling, averting disaster.Lawmakers say they drew many lessons from those painful experiences. But the two parties did not draw the same ones.For Democrats, the 2011 experience hardened their opposition to negotiating over increasing the debt limit, confirming their belief that it should be raised without conditions since it is simply making good on spending already approved by Congress, with the support of members of both political parties. Republicans, by contrast, say that same experience persuaded them that the only way to exact real spending cuts is to use the threat of a federal debt default as leverage.The clashing approaches now have the parties again dug in over increasing the debt limit. Scant progress has been made toward finding a resolution that could avoid undermining the economy, even as the banking system exhibits signs of stress.Some Republicans say that they see the high-profile failure of the Silicon Valley Bank as an isolated incident, in contrast to the widespread fear of a total banking collapse in 2008 before Congress intervened.“This is not ’08 and ’09 when the banking industry was crazy on their asset side,” said Senator Mike Braun, Republican of Indiana. “That side of the economy I think learned its lesson.”He and other Republicans said they need to continue to push for spending reductions as part of any agreement to raise the debt limit and called on Democrats and President Biden to drop their refusal to negotiate.“This is not just a one-way street,” said Senator John Cornyn, Republican of Texas. “Hopefully Biden and the administration will get real when it comes to negotiating something, rather than saying, ‘I am not going to negotiate anything.’”In an appearance on Tuesday before the American Bankers Association, Treasury Secretary Janet L. Yellen said that the president was willing to talk federal spending with Republicans, just not with the debt limit sword held at his throat.“Having this conversation needs to happen over time and in the appropriations process and not through the threat of forcing a default,” she told members of the group. “It is essential that Congress raise the debt ceiling and that they do it promptly in order not to inflict a truly catastrophic wound on our economy and our financial system.”Republicans and Democrats credit consumer confidence for holding off economic calamity and so far preventing Congress from entering the crisis atmosphere that permeated both 2008 and 2011. But there is no guarantee that confidence can be maintained, and lawmakers warn of the possibility of cascading events should the banking system become viewed as unstable or the debt limit standoff go on too long.“It has,” warned Senator Richard Blumenthal, Democrat of Connecticut, “the makings of a perfect storm.” More

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    To Tap Federal Funds, Chip Makers Will Need to Provide Child Care

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    The move seeks to help more women join the work force as industry leaders complain of labor shortages.WASHINGTON — The Biden administration plans to leverage the federal government’s expansive investment in the semiconductor industry to make progress on another goal: affordable child care.On Tuesday, the Commerce Department will announce that any semiconductor manufacturer seeking a slice of nearly $40 billion in new federal subsidies will need to essentially guarantee affordable, high-quality child care for workers who build or operate a plant.Last year, a bipartisan group of lawmakers passed the CHIPS Act, which devoted $39 billion to directly boost U.S. semiconductor factories as part of $52 billion in subsidies for the industry, in hopes of making the nation less reliant on foreign suppliers for critical chips that power computers, video games, cars and more.Companies that receive the subsidies to build new plants will be able to use some of the government money to meet the new child care requirement. They could do that in a number of ways, in consultation with Commerce officials, who will set basic guidelines but not dictate how companies ensure workers have access to care they can afford.That could include building company child-care centers near construction sites or new plants, paying local child-care providers to add capacity at an affordable cost for workers, directly subsidizing workers’ care costs or other, similar steps that would ensure workers have access to care for their children.American employers, including manufacturers, are increasingly raising concerns that a lack of access to affordable child care is blocking millions of Americans from looking for work, particularly women. President Biden pushed Congress to address those concerns over the last two years, proposing hundreds of billions of dollars for new child care programs, but he was unable to corral support from even a majority of Senate Democrats.But Mr. Biden did convince lawmakers to approve a range of new spending programs seeking to boost American manufacturing. Now, Commerce is trying to utilize a centerpiece of those efforts, which aims to expand American semiconductor manufacturing, to make at least a small dent in his large goals for the so-called care economy.The Global Race for Computer ChipsA Ramp-Up in Spending: Amid a tech cold war with China, U.S. companies have pledged nearly $200 billion for chip manufacturing projects since early 2020. But the investments have limits.Crackdown on China: The United States has been aiming to prevent China from becoming an advanced power in chips, issuing sweeping restrictions on the country’s access to advanced technology.Arizona Factory: Internal doubts are mounting at Taiwan Semiconductor Manufacturing Company, the world’s biggest maker of advanced chips, over its investment in a new factory in Phoenix.CHIPS Act: Semiconductor companies, which united to get the sprawling $280 billion bill approved last year, have set off a lobbying frenzy as they argue for more cash than their competitors.It joins a growing list of administration efforts to expand the reach of Mr. Biden’s economic policies beyond their primary intent. For instance, administration officials have attached stringent labor standards and “Buy America” provisions to money from a bipartisan infrastructure law. The child care requirement will be flexible for chip makers, but it will almost certainly divert some subsidy dollars that are meant to expand factory capacity and create jobs.The Commerce Department is expected to release its application on Tuesday, allowing companies to begin making a case for federal subsidies that the industry lobbied hard to secure from Congress.The prospect of accessing those funds has already enticed domestic and foreign-owned chip makers to announce billions of dollars in plans for new investments in Arizona, central New York and elsewhere.But even as they ramp up investments, companies are complaining of difficulties in finding workers to build and operate manufacturing facilities.America’s child care industry has not fully rebounded from the pandemic recession. It is still about 58,000 workers, or 5 percentage points, short of its prepandemic peak, according to an analysis of Labor Department data by the Center for the Study of Childcare Employment at the University of California-Berkeley.Shortly before the pandemic, the Bipartisan Policy Center in Washington surveyed 35 states and found more than 11 million children had a potential need for child care — yet fewer than 8 million slots were available.That shortage is particularly acute in some of the areas where manufacturers are set to begin building new chip plants spurred by the new legislation. Commerce Department officials calculate that in the Syracuse area, where Micron announced a $100 billion chip making investment last year after Mr. Biden signed the new law, the need for slots in child care facilities is nearly three times the size of the actual care capacity in the region.In Phoenix, where semiconductor manufacturing is booming, child care costs consume about 18 percent of a typical construction or manufacturing worker’s salary. That share is higher than the national average.Commerce Secretary Gina Raimondo, center, with Gov. Kathy Hochul of New York, said that the child care requirements should help companies hire mothers, easing a labor shortage.Sarah Silbiger for The New York TimesGina Raimondo, the Commerce secretary, said in an interview that the child-care requirements should help companies cope with a tight labor market by making it easier for them to attract and retain caregivers who have been kept from working by difficulties finding care for their children.In a speech last week, Ms. Raimondo called efforts to attract more women to the work force “a simple question of math” for industries complaining of labor shortages. “We need chip manufacturers, construction companies and unions to work with us toward the national goal of hiring and training another million women in construction over the next decade to meet the demand not just in chips, but other industries and infrastructure projects as well,” she said.Only about 3 in 10 U.S. manufacturing workers are women. Ms. Raimondo said the CHIPS Act would fail if the administration did not help companies change those numbers, by bringing in women who have children.“You will not be successful unless you find a way to attract, train, put to work and retain women, and you won’t do that without child care,” Ms. Raimondo said in an interview.The Commerce requirement would represent a relatively small step toward Mr. Biden’s much larger, and as-yet unfulfilled, child care ambitions.Mr. Biden unveiled a $4 trillion economic agenda in the months after he took office. It was split into two parts. One focused on physical investments: repairing bridges and water pipes, laying broadband cable, spurring a shift to low-emission sources of energy and catalyzing new manufacturing capacity to compete on a global stage. It was a source of repeated legislative success for the president, who signed a bipartisan infrastructure bill, the CHIPS bill and a climate, health and tax bill that passed with only Democratic votes.But Mr. Biden failed to persuade centrist holdouts in his party, like Senators Kyrsten Sinema of Arizona and Joe Manchin III of West Virginia, to back most of the provisions in the second half of his agenda. Those were largely the president’s plans to invest in people: federally guaranteed paid leave; subsidized care for children, the disabled and older Americans; universal prekindergarten; free community college for all, and more.The lopsided nature of Mr. Biden’s success threatens to exacerbate existing gender disparities in the economy. Some economists warn they could hinder future economic growth. Many of Mr. Biden’s people-focused programs were deliberately aimed at boosting female participation in the work force.It could be years before Democrats have another opportunity to pass those programs. Republicans won control of the House of Representatives last fall and roundly oppose Mr. Biden on new spending proposals and the tax increases on corporations and high earners that he has called for to cover that spending. Progressive groups and liberal lawmakers largely concede there is little chance of a child care bill making its way to Mr. Biden’s desk before the 2024 election.When it became clear last year that sweeping plans to expand and subsidize child care would not make it into the climate, health and tax bill that marked the culmination of Mr. Biden’s economic efforts in Congress, Ms. Raimondo gathered aides around a conference table. She told them, she said, that “if Congress wasn’t going to do what they should have done, we’re going to do it in implementation” of the bills that did pass.Some American manufacturers have already turned to on-site care facilities to help meet workers needs. The automaker Toyota has provided 24-hour care at a factory in Kentucky since 1993 and one in Indiana since 2004.Chad Moutray, director of the Center for Manufacturing Research at the Manufacturing Institute, which is affiliated with the National Association of Manufacturers, wrote in a report late last year that child care availability is part of the reason women do not seek more jobs in manufacturing.“Women represent a sizable talent pool that manufacturers cannot ignore,” he wrote. More

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    The U.S. Hit Its Debt Limit. What Happens Next?

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    The Treasury Department has started employing “extraordinary measures,” but the path to raising the debt ceiling is likely to be a long one.The United States hit a limit this week on how much money it can borrow, forcing the Treasury Department to initiate so-called extraordinary measures to make sure the nation has enough cash to fulfill its financial obligations.Treasury Secretary Janet L. Yellen has told lawmakers that those measures will allow the United States to keep paying military salaries, retiree benefits and interest to bondholders through at least early June.But initiating those extraordinary measures is just the first step in a series of moves that will take place as the Treasury tries to keep the United States from defaulting on its debt. Ultimately, it will be up to Congress to decide whether to let the country borrow more money or allow it to default on its debt by failing to pay investors who expect interest and other payments.At stake is the fate of the U.S. economy, which could face a financial crisis and fall into a deep recession if lawmakers cannot reach an agreement.Among the looming questions is when the United States will hit the so-called X-date — the point at which the government can no longer find creative ways to stay beneath the $31.4 trillion debt limit and will need to borrow more money or fail to pay its bills.The other big question: Will Congress agree to raise the borrowing cap?So far, House Republicans have vowed to oppose any increase in the debt limit without spending cuts. President Biden has said the debt limit needs to be raised without conditions. That has set up what could be a protracted fight to ensure that the United States does not default on its debt.Here are some of the key moments to expect over the next few months.A Spring Budget BattleThe White House is expected to unveil its annual budget proposal in early March, outlining Mr. Biden’s spending priorities. That could serve as an opening bid for any negotiations between the Biden administration and Republicans in Congress, who have been calling for spending cuts and are likely to seize on this document as evidence of what they say is “runaway spending.”Understand the U.S. Debt CeilingCard 1 of 5What is the debt ceiling? More