Treasury Secretary Yellen Says Default Could Occur June 1st
The House and Senate return next week with the clock ticking until the “X-Date” of June 1st by which the debt limit needs to be raised to avoid the first default in United States history, according to an announcement by Treasury Secretary Janet Yellen. House Speaker Kevin McCarthy successfully passed his debt limit extension proposal in the House last week, proposing to raise the debt limit in exchange for cuts in domestic discretionary spending to FY2022 levels and making significant changes to other existing federal programs.
President Biden has called all four Congressional leaders to the White House for a meeting on Tuesday, May 9th, in hopes of charting a path forward to address the debt limit. Late this week, the White House also floated the idea of a temporary extension of the debt limit through October 1, though the chances of House Republicans agreeing to it are slim. The Biden Administration continues to call for and seek a “clean” increase in the debt limit and both House and Senate Democrats are attempting to make the case that the House Republican plan would slash important programs for seniors, veterans, and the most needy Americans. House Democrats this week also unveiled a plan to use a “discharge petition” to force a House floor vote on a clean debt limit increase aimed to put pressure on moderate, swing district House Republicans. There are very few actual session days in May so it will be an intense and bumpy ride leading up to the announced June 1 “X-Date”, unless consensus is reached early by the Leaders and that consensus is one which will be supported by rank-and-file Members on both sides of the aisle.
Here’s what else you may have missed this week:
May action on FY2024 Appropriations has been scheduled. The House Appropriations Committee has announced scheduled subcommittee and full committee mark up dates. House Republicans will be marking up their bills to FY2022 levels, consistent with the legislation passed last week and $130bn less than current funding levels. How that funding will be divided between the subcommittees is not yet announced, but it is a significant drop in overall discretionary spending from current spending levels, and if Defense spending is spared – which many in the House are advocating for and is likely – the cuts to domestic discretionary spending will be even more dramatic. The relevant committee dates are as follows:
HOUSE FY2024 APPROPRIATIONS MARKUP SCHEDULE:
The House Appropriations Committee has announced its plans to hold the FY2024 markups in two tranches:
- Tranche 1: Subcommittee 5/17 – 5/18; Full Committee 5/23 – 5/25
- Tranche 2: Subcommittee 6/7 – 6/8; Full Committee 6/13 – 6/15
While there is no formal announcement about which bills will be considered during each tranche, some news reports indicate the first tranche of markups will include the following five bills: Defense; Energy & Water; Homeland Security; Military Construction & Veterans Affairs; and Legislative Branch.
SENATE FY2024 APPROPRIATIONS MARKUP SCHEDULE:
Senate Appropriations Committee Chair Patty Murray stated in a recent interview that the Senate Appropriations Committee is aiming to have its first markups on May 18, though that is not yet set. In addition, negotiations continue over the overall topline funding level that the Senate will use for its FY2024 bills. Unlike the House, Chair Murray and Ranking Member Susan Collins are reportedly negotiating the topline levels in a bipartisan manner and are not likely to adhere to the FY2022 levels proposed by the House.
More Congressional action is likely on competition with China. In the Senate, Majority Leader Chuck Schumer announced on Wednesday plans to introduce a bipartisan bill to respond to recent Chinese aggression against Taiwan and to enhance economic competition with China. The bill itself, which will be introduced in the coming months will have 5 focus areas:
1. Blocking Chinese development of advanced technologies;
2. Restricting foreign investment in China;
3. Encouraging new domestic development of advanced technologies;
4. Creating an alternative to China’s “Belt and Road” initiative;
5. Preventing China from starting a war with Taiwan.
Schumer believes he can pass this legislation in the Senate with bipartisan support where it will need 60 votes to clear its first hurdle. It is uncertain if House Republicans will be as ready to take on this legislation after they voted against the related semiconductor bill in the previous Congress.
