The United States could default on its debt within a month, all because of concessions Kevin McCarthy made to the House Freedom Caucus to become speaker.
Treasury Secretary Janet Yellen warned Congress Monday that the government could run out of money to pay its bills as soon as June 1, earlier than initially anticipated, unless the debt ceiling is raised or suspended.
While Yellen acknowledged it’s “impossible” to say exactly when federal funds will run out, “given the current projections, it is imperative that Congress act as soon as possible to increase or suspend the debt limit in a way that provides longer-term certainty that the government will continue to make its payments,” she said in a letter.
Democrats and Republicans are locked in a protracted battle over the debt limit, which the GOP has indicated it’s willing to hold hostage in order to reduce government spending. The government already hit the debt ceiling in January, and Yellen has repeatedly warned of the disastrous consequences should the U.S. default on its debt. “It’s simply a recipe for economic and financial catastrophe to think we can pay some of our bills and not all of them,” she told the Senate Finance Committee in mid-March.
House Republicans passed a bill last week that would raise the debt limit into next year, but only after drawn-out in-party negotiations. The measure is unlikely to pass the Democratic-controlled Senate, and President Joe Biden has already promised to veto it if it does. The bill includes several radical measures put forward by members of the House Freedom Caucus, such as food stamp and Medicaid work requirements, reduced funding for the IRS and climate change initiatives, and an end to Biden’s student loan forgiveness program.
Caucus members were some of the most vocal critics of McCarthy’s debt ceiling bill over the past few weeks. The far-right wing of the House Republicans also was primarily responsible for forcing all of us to sit through seemingly endless rounds of votes for House speaker in January.
McCarthy may have ultimately won the gavel, but only after he made multiple concessions to the House Freedom Caucus that essentially gave them all the power. These include the ability to boot him from the speakership—for instance, if he starts making debt limit deals with Democrats that they don’t like.
Democrats are refusing to compromise on the debt ceiling, and if the battle goes on much longer, the U.S. could be in serious trouble. It’s time for Congress to get a move on, but it’s unclear what McCarthy will do next.