Big Political Fight Everyone Predicted Is Getting Underway

In other years, it might be a humdrum political matter: Treasury chief Janet Yellen told Congress on Friday the nation will hit its debt limit on Thursday, reports Politico. This year, however, the warning is expected to begin what promises to be a protracted and high-stakes fight between the White House and the new Republican majority in the House. In her letter, Yellen said she could take "extraordinary measures" to keep the nation's bills paid, probably until June, per the New York Times. But at some point, the US will go into default unless Congress raises the current debt ceiling from its current limit of $31.4 trillion, per the AP.

And that's the sticking point: House Republicans are expected to use the threat of default as leverage to wring extensive spending cuts from the Biden administration, reports the Washington Post. The Post lays out the stakes involved: "The United States has never defaulted on its debt in its history. In prior stalemates, economists have warned that a failure to find a compromise could trigger a recession, wiping out billions of dollars in economic growth and eliminating up to 6 million jobs." Yellen sounded a similar note in her letter, warning that "failure to meet the government's obligations would cause irreparable harm to the US economy, the livelihoods of all Americans, and global financial stability." Even the threat of default could hurt the nation's credit rating, as has previously happened, she added.

Earlier this week, House Speaker Kevin McCarthy said he planned to meet with Biden to talk about all of the above. But "we've got to change the way we're spending money wastefully in this country," he said. One of his deputies made a similar point to reporters this week: "If you're going to ask for an increase in the limit, at some point in time, you've got to sit down and say why are we hitting the limit?" said House Majority Leader Steve Scalise, per the Hill. "Why are we maxing out the credit card?" As a counter, economist Dean Baker, a White House ally, said Republicans are poised to make "a terrorist attack on the economy." (More Janet Yellen stories.)