The threat of a debt-ceiling crisis has become more immediate. A May 1 memo from Phillip Swagel, director of the Congressional Budget Office, informed Congress that because tax receipts were running below previous estimates, there is a “significantly greater risk” that the Treasury will run out of funds by early June and be unable to meet its obligations fully. If that happens, “the government will have to delay making payments for some activities, default on its debt obligations, or both.” That same day, Treasury Secretary Janet Yellen wrote to Congress urging swift action, and President Biden invited the top four leaders of Congress to the White House to discuss fiscal issues.
The source of the current impasse is straightforward. The House Republican majority insists that it won’t raise the debt ceiling without an agreement to cut spending significantly and has passed a bill to accomplish this goal, while the president demands a “clean” vote to increase the debt ceiling without preconditions.
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