May 21, 2023

Congress Has Only A Few Days Left To Reach Debt Limit Deal

According to independent analysts and the U.S. Department of the Treasury, the U.S. federal government will reach its statutory debt limit, which is the cap on its borrowing authority, in early June. If Congress does not raise the limit by that date, the federal government will have to determine which programs and priorities to fund, including interest payment on the national debt, and will be forced to default on other obligations.

President Joe Biden, White House officials, and top leaders from the U.S. Senate and House of Representatives have been huddling over the last week to try to forge a deal that will prevent a breach of the debt limit. Democrats, led by President Biden, want Congress to pass a “clean” bill that only raises the debt limit. Republicans, led by House Speaker Kevin McCarthy (R-Calif.), want to combine a debt limit increase with spending cuts and other policies changes.

While the two parties have remained at odds for months, there was some positive movement in negotiations last week and, on Wednesday, President Biden and House Speaker Kevin McCarthy (R-Calif.) both said they were determined to reach a deal soon. “We’re going to come together because there’s no alternative,” President Biden told reporters before leaving for a Group of Seven summit in Japan. (President Biden also said he would cut his trip short in order to ensure he is in town for final negotiations.) As Reuters reported, Speaker McCarthy said reaching a deal within the new few days is “doable.”

In lieu of a long-term debt limit agreement, policymakers could agree to a short-term extension — and there is precedent for such an action. Congress and the president agreed to short term increases in the borrowing threshold in 1993, 1996, 2009, 2013, and 2021. Want to learn more about the statutory debt limit and the current debate about raising it?

Read this memo from the U.S. Chamber of Commerce.

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