Zandi said the government is most likely to run out of money to pay its bills on June 8 if Congress does not act, though he said it could happen any time between June 1 and Aug. 8. "We need to end this drama as quickly as possible. If we don't, we'll go into a recession and our fiscal problems will be made even worse," Zandi told the committee. The hearing is the first of several planned by Senate Democrats, who say legislation that passed the House last week on a party-line vote would undercut child care, education and other government programs. Republicans say the cuts are needed to slow the growth of the U.S. debt, which is projected to climb steadily in the years to come as an aging population drives up pension and health costs.
That would require the government to devote a growing share of revenues to paying interest on its debt, rather than more productive uses, without action to narrow annual budget shortfalls.
Biden is due to meet with House Speaker Kevin McCarthy and other top lawmakers at the White House on Tuesday. The standoff is worrying investors, who have pushed yields on as much as $650 billion of Treasury securities to record highs. Democrats have accused Republicans of hostage-taking, but Brian Riedl of the conservative Manhattan Institute said that Congress has often used debt-ceiling deadlines to reach budget deals in the past. "If we don't want lawmakers to use this risky and flawed process to address growing deficits, then let's debate and come up with a better budget process," he said.
The centerpiece of the House Republican plan would cut a wide swath of government spending by 8% next year, and cap its growth by 1% each year after that. The Republican plan does not specify what spending would be cut, but some party figures have said they would shield military and veterans programs. Democrats say that would force average cuts of 22% on domestic programs like education and law enforcement, a figure top Republicans have not disputed. Biden has proposed raising taxes on the wealthy to narrow budget deficits, but Senate Democrats have not produced a proposal of their own. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ FACTBOX-What's in the US House Republicans' debt-ceiling spending-cut bill? FACTBOX-U.S. debt ceiling: A 'clean' increase is not the rule How a US debt crisis standoff could cause a recession - a bad one ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Andy Sullivan and Moira Warburton; Editing by Scott Malone and Jonathan Oatis)
