Pressure Mounts for Compromise on Debt Ceiling

With House Republicans uniting behind a debt-ceiling package, the pressure is on for President Joe Biden to meet with House Speaker Kevin McCarthy and hammer out a compromise.

As the White House continues to push for a “clean” bill that raises the debt ceiling with no conditions and the GOP-controlled House stands firm on its “Limit, Save, Grow Act,” financial markets are beginning to reflect investor anxiety at the possibility of the U.S. defaulting on its $31 trillion debt, the Washington Examiner reported.

Desmond Lachman, an economic senior fellow at the American Enterprise Institute, said the rising cost of credit default swaps – instruments that allow a lender to insure against default by a borrower – is an indication that debt-ceiling jitters are starting to show in the markets.

“The economy is slowing, and we’ve just had a slight problem with Silicon Valley Bank and Signature Bank,” Lachman told the Examiner. “With markets unsettled and with a regional bank crisis going on, the last thing you need is to have the full faith and credit of the United States being put into question, and have all foreign markets go crazy and everybody wanting to dump our securities.”    

Bipartisan Policy Center Economic Policy Director Shai Akabas said that debt is “rising too quickly” and urged Biden and the Republicans to have conversations on the debt ceiling.  

“We have been in a similar position and gotten out of it numerous times before, but I don’t think that we should be complacent because it is a very serious situation,” Akabas told the Examiner. “Both sides at a minimum need a way to save face in whatever result comes out of this situation, so that means that the two sides need to get into a room and figure out a way that both of them can live with a resolution that can pass both houses of Congress and be signed by the president.”

Rep. Kevin Hern, R-Okla., who heads the Republican Study Committee, the largest conservative caucus in the House, said the GOP’s legislation is “not perfect” and asked his colleagues in a letter to “safeguard the reforms in this package and memorialize its contents in law.”

“The next phase of this fight will play out in the Senate and the public square,” Hern wrote. “Ultimately, the leverage we hold will come from the pressure we create through a strong message.”

“It’s time to finish the job,” he added, appropriating Biden’s reelection message.

Saying that the U.S. is “not a deadbeat nation,” White House press secretary Karine Jean-Pierre said the country should not default on its debt and repeated the statement she made after House Republicans passed the Limit, Save, Grow Act.

“[What] we have seen they put together is an agenda, an extreme MAGA wish list that basically says they’re connecting the two,” she said, referring to the debt ceiling and the budget. “They’re saying to the Senate, they’re saying to the president that we have to go with this agenda in its full form. And the president has said really, really, really clearly when it comes to the debt ceiling, they cannot allow this to happen.”