US Could Default On Its Debt by June 1st, Janet Yellen Warns

Post Reply New Topic

Some Senate Democrats are circulating a letter urging President Joe Biden to prepare to invoke the 14th Amendment to lift the debt ceiling and avert default on his own, without an act of Congress.

The emerging letter, which is still in the works, is a sign of growing progressive dissatisfaction with some aspects of the legislative negotiations, like Republican demands to impose tougher work requirements to receive federal benefits. The letter is being led by Sen. Tina Smith, D-Minn., as well as Sens. Elizabeth Warren, D-Mass., Jeff Merkley, D-Ore., Ed Markey, D-Mass., and Bernie Sanders, I-Vt.

"We write to urgently request that you prepare to exercise your authority under the 14th Amendment of the Constitution, which clearly states: 'the validity of the public debt of the United States...shall not be questioned,'" the senators write in the draft letter, obtained by NBC News. "Using this authority would allow the United States to continue to pay its bills on-time, without delay, preventing a global economic catastrophe."

"While we cannot default on our debt, we also cannot allow the destructive Republican budget to be implemented," they continue.

Sanders said in an interview Wednesday, “The message is, in a time of massive income and wealth inequality," Congress cannot "balance the budget on the backs of children and the elderly and working families and force kids to go hungry."

"I mean that is insane. Unacceptable. There is an option out there — it’s the 14th Amendment, it was put into the Constitution for good reason," he said. "The president should implement it.”

Merkley said it’s “important” for Biden to be in a position to reject House Speaker Kevin McCarthy’s demands, which he said amount to an “attack on ordinary working families” and would “unleash fossil fuels on America.”

“I want the president to see that he has the support in the Senate to use the 14th Amendment or other executive powers, including the platinum coin — that he has support to say no to outrageous demands from the radical right that’s trying to terrorize American families,” he said Wednesday.

Some experts believe the debt ceiling statute is unconstitutional and cannot prohibit the U.S. from borrowing to pay its debts. But the Biden administration and its predecessors have been reluctant to invoke the 14th Amendment. Then-President Barack Obama's administration looked into it, but his Justice Department never made its opinion on the matter public. Some officials worried that if such a move were to be challenged in court, it could undermine the full faith and credit of the U.S.

Biden said recently he has been “considering” the 14th Amendment but concluded that it would not solve the current stalemate, given that “it would have to be litigated.” But the White House Office of Legal Counsel continues to study the matter, according to a source familiar with the talks, for possible future unilateral use.

Sen. Chris Murphy, D-Conn., voiced skepticism Sunday on NBC's "Meet The Press" when asked if Biden should use the 14th Amendment to continue paying the bills.

"I don't want to give Joe Biden advice, but I think we should do our job," he said. "I think that's a precedent to just absolve Congress from being adults.

Republican negotiators tasked with cutting a deal with the White House to avoid a potentially disastrous debt default at the end of the month said Friday they'd paused talks with the Biden administration because they're "not productive."

Part of the hang-up is that House Republicans want to force major spending cuts that are opposed by President Joe Biden and dead on arrival in the Democratic-controlled Senate.

A White House spokesperson said Friday that “a responsible, bipartisan budget agreement remains possible if both sides negotiate in good faith and recognize that neither side will get everything it wants.”

“There are real differences between the parties on budget issues and talks will be difficult,” the spokesperson added. “The president’s team is working hard towards a reasonable bipartisan solution that can pass the House and the Senate.”

Former President Donald Trump, who's urged Republicans to let the default happen if their demands aren't met, reiterated that call on his social media website Friday.

US Debt Ceiling Talks Resume as Default Date Ticks Closer

https://www.reuters.com/world/us/us-debt-ceiling-talks-paused-punchbowl-reporter-2023-05-19/

A second meeting on Friday between White House and Republican congressional negotiators on raising the federal government's $31.4 trillion debt ceiling broke up with no progress cited by either side and no additional meeting set.

That came at the end of a day of acrimonious talks that were broken off for several hours, with less than two weeks to go before June 1, when the Treasury Department warned that the federal government could be unable to pay all its debts. That would trigger a calamitous default.

The White House acknowledged that "serious differences" remained with Republicans who control the House of Representatives and who have said they will not approve an increase in the federal government's borrowing limit without agreement on sharp spending cuts.

There appeared to be no significant progress Saturday in debt ceiling talks as the impasse between the White House and Republican congressional leaders continued.

Negotiations between representatives for the White House and House Speaker Kevin McCarthy had resumed briefly Friday evening after stalling earlier in the day, but the two sides left the Capitol without a deal.

McCarthy tweeted Saturday that the "White House is moving backward in negotiations."

In a statement Saturday evening, White House press secretary Karine Jean-Pierre alleged that McCarthy's team had submitted a deal Friday which "was a big step back and contained a set of extreme partisan demands that could never pass both Houses of Congress."

Following a short meeting Friday night, which lasted less than an hour and ended a little after 7:30 p.m., local time — this after the two sides had alleged earlier Friday that talks had completely stalled — the groups departed without an agreement, but were expected to keep the lines of communication open, CBS News learned.

Can’t potus just say “Y’all are nuts. I’m raising the debt ceiling by Executive Order.” ?

Dozens of progressives have signed onto a letter urging President Biden to invoke the 14th Amendment and bypass Republicans to prevent the nation from defaulting on its debt.

Congressional Progressive Caucus (CPC) leaders Pramila Jayapal (D-Wash.), Ilhan Omar (D-Minn.) and Greg Casar (D-Texas) led more than 60 progressives in penning the letter to Biden on Friday, as the president attends the Group of Seven (G-7) summit abroad this week.

“If the options are either agreeing to major cuts to domestic priorities under the Republican threat of destroying the economy and moving forward to honor America’s debts, we join prominent legal scholars, economists, former budget officials, and a former president in advocating for invoking the 14th Amendment of the Constitution,” they wrote.

“Not only does the debt ceiling run counter to the Constitution’s mandate that the validity of America’s public debt shall not be questioned, it contradicts the appropriations law that requires the Treasury to issue debt for the funding you are obligated to administer at Congress’s direction,” the group added.

Progressive lawmakers renewed their call for President Joe Biden to bypass Congress to avert a default after the abrupt cancellation of debt ceiling talks on Friday.

But the White House remains resistant. It issued a subdued statement indicating it sees no reason to pull the plug on talks. And privately, its message has been even blunter.

Senior Biden officials have told progressive activists and lawmakers in recent days that they do not see the 14th Amendment — which says the “validity of the public debt” cannot be questioned — as a viable means of circumventing debt ceiling negotiations. They have argued that doing so would be risky and destabilizing, according to three people familiar with the discussions.

The White House has studied the issue for months, with some aides concluding that Biden would likely have the authority to declare the debt limit unconstitutional as a last-ditch way to sidestep default. But Biden advisers have told progressives that they see it as a poor option overall, fearing such a move would trigger a pitched legal battle, undermine global faith in U.S. creditworthiness and damage the economy. Officials have warned that even the appearance of more seriously considering the 14th Amendment could blow up talks that are already quite delicate.

“They have not ruled it out,” said one adviser to the White House, granted anonymity to speak candidly about discussions. “But it is not currently part of the plan.”

The administration’s deep skepticism of the 14th Amendment as a workable off-ramp further heightens the stakes surrounding the debt ceiling talks, after negotiators briefly walked away from the table on Friday.

The White House acknowledged that the two sides had hit an impasse, and Republicans cited disagreements over the level of spending restrictions as a major sticking point. But the president’s team reiterated the need to eventually find an agreement.

Biden himself has said that he sees a bipartisan deal as the only option to the current standoff, casting doubt on the 14th Amendment as workable in public remarks. But the private resistance being registered by his aides has frustrated progressives who worry the president is too readily giving up his leverage. It also threatens to fracture months of party unity behind Biden’s debt ceiling strategy, exposing the White House to increasingly vocal criticism just as it enters the final stage of its high-stakes standoff with the GOP.

“I think Biden is actually flirting dangerously with a backlash among his own supporters,” said Robert Hockett, a Cornell University law professor close to progressive lawmakers who has advocated for ways that Biden can take unilateral action.

Top White House aides have largely dismissed the rising angst among progressives and other allies who feel left out of debt talks. Instead, the administration has effectively gone all in on a debt ceiling-and-budget agreement with Republicans that officials hoped to finalize as early as Sunday, the people familiar with the discussions said.

trump’s comments during the CNN trump rally were pretty much “Yeah, I raised the debt ceiling three times.. but now I say no don’t do it because I’m not president anymore.”

Wtf. Why anyone is letting that guy call the shots after the American people fired his ass is beyond me.

Plan b = ?

Treasury Secretary Janet Yellen said Sunday that early June is a "hard deadline" for the federal government to raise the debt ceiling and warned that bills will go unpaid if Congress fails to reach a deal before the U.S. runs out of money, in an exclusive interview on “Meet the Press.”

“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. And I will continue to update Congress, but I certainly haven’t changed my assessment,” Yellen said. “So I think that that’s a hard deadline.”

Asked by NBC News' Chuck Todd if the country can stretch to June 15, when more tax payments are due, before defaulting on its debts, Yellen said the possibility is "quite low."

"Well, there’s always uncertainty about tax receipts and spending," she said. "And so it’s hard to be absolutely certain about this, but my assessment is that the odds of reaching June 15th, while being able to pay all of our bills, is quite low."

Yellen warned that some of the country’s bills will go unpaid if the debt ceiling isn’t raised.

“We take the debt ceiling seriously as a constraint on our ability to pay bills that are coming due,” she said. “And my assumption is that if the debt ceiling isn’t raised, there will be hard choices to make about what bills go unpaid.”

The president opened a press conference in Japan by urging Republicans to “move from their extreme positions,” which he criticized as “frankly unacceptable.”

“It’s time for Republicans to accept that there is no bipartisan deal to be made solely solely on their partisan terms,” he said. “They have to move as well.”

House Speaker Kevin McCarthy, R-Calif., on Sunday said he had a “productive” call with Biden, and they agreed to meet in-person Monday afternoon.

“There’s no agreement, we’re still apart, the agreement was to get our teams back together so everyone clearly understands what we’re talking about, what they’re talking about,” McCarthy told reporters. "Let them brief up the president, let him get some sleep. And he wanted to get together personally tomorrow — I agreed to that, we’d do that sometime in the afternoon. Time is of the essence.”

Biden and McCarthy’s staffs are set to reconvene at 6 p.m. Sunday to discuss remaining issues, according to a White House official.

Previous administrations have considered invoking the 14th Amendment to raise the borrowing limit, but they never used it — including the Obama administration in which Biden served as vice president.

Asked whether using the 14th Amendment falls into the category of “extraordinary measures,” Yellen said Sunday it’s “used in a different way” and there “hasn’t been much discussion” of using it.

“As President Biden said, I believe this morning, it doesn’t seem like something that could be appropriately used in these circumstances, given the legal uncertainty around it,” she said. “And given the tight time frame we’re on. So my devout hope is that Congress will raise the debt ceiling.”

Biden did not rule out using the 14th Amendment when asked about it during his press conference in Japan: “I’m looking at the 14th Amendment as to whether or not we have the authority.

“I think we have the authority,” he said. “The question is, could it be done and invoked in time that it could not would not be appealed, and as a consequence, pass the date in question, and still default on the debt. That’s a question that I think is unresolved.”

Pressed again, Biden said that “a unilateral action that could succeed in a matter of two weeks or three weeks” has not been agreed upon.

“That’s the issue,” he said. “So it’s up to lawmakers. But, my hope and intention is when we resolve this problem, I find a rationale to take it to the courts and see whether or not the 14th Amendment is in fact something that would be able to stop it.”