White House Mulls Short-Term Debt Ceiling Extension If Negotiations Break Down
The White House is considering a short-term extension of the debt ceiling into the fall, which would be seen as a ‘last resort’ to prevent the United States from default in the event negotiations with top Republicans break down, CNBC reports.
On Thursday, the Office of Management and Budget (OMB) Director Shalanda Young hinted that a temporary debt ceiling extension was an option.
“I’m sure one of the things on the table we will have to work through is how long. I’m not going to take anything off the table,” she told reporters when asked about a possible short-term extension.
The White House plans to meet with House Speaker Kevin McCarthy (R-CA) on Tuesday, after the Treasury Department identified June 1 as the drop-dead date for the debt ceiling, The Hill reports. Also expected to be present are Sen. Majority Leader Chuck Schumer (D-NY) and Senate Minority Leader Mitch McConnell (R-KY).
The president plans to warn congressional leaders about the risk of a default, reiterating his stance that a debt limit should be increased without provisions, but House Republicans have demanded an increase also must come with millions in spending cut agreements.
When asked again if an extension is off the table, Young said, “Right now, remember where our debate is. We’re in the take it or leave it phase,” referring to Republicans’ stance on the meeting.
“I would love to be in that part of the conversation,” she added. -The Hill
McCarthy’s GOP-approved plan which he will present on Tuesday involves raising the borrowing limit, paired with spending cuts – a condition which Democrats have said is a non-starter.
Goldman, meanwhile, thinks that a near-term deal on Tuesday could lead Congress to consider a short-term extension.
If congressional Republicans decide that reaching a deal is unlikely before June 1, a short-term extension is a clear possibility. If deemed necessary, the most likely new deadline would be (1) late July, since this is what many lawmakers had expected and it coincides with the start of the long August recess, or (2) September 30, the end of the fiscal year when a deal on spending levels for FY2024 will be necessary in any case to avoid a government shutdown (a shutdown would occur due to a lapse in spending authority and is unrelated to the debt limit). That said, voting for a debt limit increase twice is harder than voting for it once, so we would expect Republicans to be reluctant to press a short-term extension if they think they can avoid one. While Democrats would likely prefer a single long-term extension (to 2025), they might have no choice but to go along with a “clean” (or nearly clean) short-term extension if Republicans offer it just before the deadline.
Goldman also believes negotiations to begin in earnest very soon, and discussions in the coming days to focus on ‘a potential agreement on spending levels.”
Fri, 05/05/2023 – 11:25