By Jason Lange
WASHINGTON (Reuters) – A bipartisan group of U.S. lawmakers is preparing a plan to move the debt ceiling from a fixed dollar amount to As a percentage of national economic output, the group’s top Republican said Sunday.
The proposal would replace Washington’s current federal debt ceiling – currently set at $125. 4 trillion – The Republican co-chair of the moderate Problem Solvers Caucus, U.S. Rep. Brian Fitzpatrick, said the rules would limit debt to a fraction of national economic output.
Fitzpatrick – appearing on Fox News Sunday with Democratic Problem Solvers co-chair Josh Gottheimer – said Republican House Speaker Kevin McCarthy will lead talks with the White House on the debt ceiling. But he and Gottheimer are “adding bricks” to their proposal to help avert a crisis.
“We’re just going to offer … a possible bridge-building solution,” Fitzpatrick
The US government approached its legal borrowing limit on Thursday. The Treasury has warned that its unconventional cash management measures will only allow the government to pay all of its bills until early June, when the country risks failing to meet its obligations, including its debt securities.
House Republicans hope to use the critical deadline to force spending cuts, while the White House says there should be no talks on lifting the debt ceiling. The razor-thin Republican majority in the House has had a huge impact on the party’s most hawkish voices.
Washington’s debt is currently equal to % of the US economy produced in a year. Fitzpatrick said the proposal he is working with Gottheimer would force Washington to cut the budget if federal borrowing exceeds a certain percentage of economic output. He did not say how much that share was.
Congressional provisions on the debt ceiling are intended to limit the growth of the national debt. The measure didn’t have that effect because, in practice, Congress separates the annual budget process — deciding how much to spend — from the debt ceiling, essentially agreeing to pay the cost of previously approved spending.
The United States is one of the few countries with legal restrictions on borrowing.
Democratic President Joe Biden said on Friday he would “discuss” the U.S. debt issue McCarthy said he would sit down with the president to discuss “responsibly” raising the debt ceiling.
The White House says raising the debt ceiling should not be a negotiation. But some Democrats, including Gottheimer and prominent Democratic moderates such as U.S. Senator Joe Manchin, have said the administration needs to negotiate the debt ceiling.
A 2011 The standoff over the debt ceiling led to S&P downgrading the US credit rating for the first time in history. Failure to address the issue this time could disrupt global markets and trigger a recession. Over the weekend, I’m optimistic that they’ll sit down with Republicans to discuss the debt ceiling.
Biden will host Democratic congressional leaders at the White House on Tuesday.