WASHINGTON, D.C. (AP) - Fights in Congress over the nation's borrowing power have been contentious, but follow a common pattern: lawmakers always find a way to pull back before the markets panicked and the country risked a dangerous debt default.
Some lawmakers claim that the fight this year has a new feel.
The new Republican majority is eager for a showdown on spending and will not back down. The Republicans blame the rising food and gas prices, and the national debt on what they see as excessive federal spending. They have refused to pass a debt ceiling increase that is 'clean', despite the White House's insistence on such legislation being passed without conditions. This impasse shows no sign of ending before the deadline of action this summer.
Rep. Patrick McHenry of N.C. described his outlook as'very worried. "Frankly, I can't see a way to get there now." There is no set process, no dialogue and no discussion.
The current political climate is similar to that of 2011, when the new Republican majority came to power following a resounding victory in an election and was determined not to give up on a Democratic White House, but to demand major spending cuts as a condition for a debt ceiling increase.
In order to resolve this impasse, Congress passed the Budget Control Act and President Barack Obama then signed it. The bill allowed borrowing temporarily, set new limits on spending and created a bipartisan "supercommittee" to recommend at least $1.2 billion more in deficit reduction within 10 years. Republicans and Democrats in the panel were unable to reach a compromise. This led to automatic spending cuts.
Some damage had been done. Standard & Poor’s Ratings Services, the rating agency for U.S. government debt, downgraded it in 2008 because they lacked confidence that political leaders would take the necessary steps to avert a fiscal crisis.
He was clear from the beginning that there would be no negotiation on legislation which must pass to prevent an American default.
The partial shutdown of the government, which began on Oct. 1, coincided quickly with the prospect of default. Congress passed legislation on Oct. 16 to eliminate the two threats. GOP lawmakers who wanted to roll back Obama’s signature health law received nothing in return for their efforts. We fought the right fight. John Boehner, then House Speaker, admitted that 'we just didn't succeed'.
Republicans are saying that Biden will follow the 2011 path, not the 2013 one. Biden was Obama's Vice President during both debt ceiling fights.
"President Biden, is that right?" Rep. Scott Perry (R-Pa.), the leader of House Freedom Caucus, a hard-right group, said. His poll numbers have plummeted and will continue to do so, said Rep. Scott Perry, R-Pa.
Perry stated that Biden's political position does not allow him to ignore House Republicans.
Perry said. "Everyone might have some injuries, but he won't walk out of it unscathed," Perry said.
After a turbulent start to the new Congress, in which Republicans struggled with electing a speaker they have taken great pains to demonstrate unity. Both conservatives and moderates in the House insist that Biden must be engaged.
Byron Donalds (R-Fla.) said that any damage to the Treasury and Bond markets, or the economy in general, would fall on the President of the United States. He's the person who started the whole saga by saying he didn't want negotiations.
Don Bacon (R-Neb.) added, "He has to come halfway."
The Democratic Rep. Gerry Connolly from Virginia expressed his concern that some Republicans think the damage caused by a federal default can be managed, and not something to avoid at all costs.
Connolly stated that some people substitute belief for empirical evidence, and do not accept warnings from economists, Wall Street or Janet Yellen.
A breach of the debt ceiling differs from a shutdown of the federal government. Once the Treasury's cash is exhausted, the government can continue operating. Outgoing payments are limited by the amount of revenue. All payments may not be made in full and on time. Many people fear that such an event could shake the global financial system to its foundations.
Some legislators don't think the consequences will be as devastating. Rep. Bob Good (R-Va.) said that breaching the debt ceiling without an agreement on increasing it would force us to 'prioritize our spending'
Good said, "I'm quite honest, I'm not scared of that."
Treasury Secretary Janet Yellen said that the government could be unable pay its bills by June. Mark Zandi told a House committee this week that the so-called X Day will likely occur mid-August. He predicted that market pressures would likely increase after Congress returns from the July 4th recess.
Zandi stated that the current state of the system was fragile, as we can see by the recent events, given the banking crises. "Adding the debt ceiling as a concern for investors would not be advisable."
He said that defaulting would have immediate and long term consequences.
Zandi stated that 'under any scenario we would enter a recession. It would be severe and the financial markets would be thrown off balance'.
Joe Manchin, a West Virginia Democrat senator, encourages negotiations in the Senate. He said, 'I believe Kevin McCarthy has shown himself to be the most reasonable'.
McCarthy's efforts have also been backed by the GOP leadership in Senate. Some Senate Republicans, however, believe that spending debates should be limited to the annual bills passed by Congress to fund government agencies. A debt limit increase does not authorize any new federal spending. It only allows borrowing for the existing budget approved by Congress.
Mitt Romney (R-Utah) said: 'Look, even if there are disagreements over spending and we need to shut down the government in order to resolve the issue, that's fine. But threatening the collapse of the U.S. economy and the world's without raising the debt limit is, to my mind, an excessive weapon.
Since the 1960s, there have been approximately 80 agreements to increase or suspend the borrowing limit. Romney pointed out that Democrats helped extend the debt ceiling multiple times under Donald Trump.
Romney said, 'Ofcourse, last time, you had President Trump pushing to raise debt ceiling. But somehow, when we have Democratic presidents, we find faith'.
This week, the focus on the debt ceiling, which is now around $31.4 trillion, increased. McCarthy sent a letter Biden, warning that his refusal to negotiate 'could stop America from meeting its commitments and have dire ramifications' for the nation.
Biden responded in a formal way that he was not willing to meet with McCarthy until the House Republicans had released their budget plan. McCarthy was asked to do this before the lawmakers left Washington for Easter recess on Thursday.
As I have said repeatedly, this conversation must not interfere with the Congress' fundamental obligation to pay bills for the Nation and prevent economic disaster.
These letters didn't seem to produce any progress or goodwill. Republicans left town with no budget proposal. McCarthy said that Biden put the economy at risk by making the decision on Thursday, and made a joke about the president's alleged age.
I don't even know what else I can do. I would take the lunch to White House. McCarthy laughed when he said that he would prepare soft food for him if 'that's what the man wants'.