Shalanda Young, director of the Office of Management and Budget, warned Thursday that countries such as China and Russia would capitalize on the “chaos” that would ensue if the United States defaulted on its debt and use it as evidence that democracy was dysfunctional.
Young was echoing concerns expressed earlier in the day by Director of National Intelligence Avril Haines before a Senate Armed Services Committee hearing. Haines told senators that, in the case of a U.S. default, it would be “almost a certainty that [China and Russia] would look to take advantage of the opportunity” to demonstrate “that we’re not capable of functioning as a democracy.”
In a rare appearance at the White House news briefing Thursday, Young said that U.S. competitors love to see the partisan fighting over debt ceiling negotiations and stressed again that “Congress needs to do its job.”
“They love to see chaos in the American system. They love to see that we can’t do our basic jobs,” Young said. “It’s no less than a test of what works in this world: Does democracy still work or does the Chinese way work? In things like this, we have to step up to the plate and do what’s right for the American people because it’s no less than what [Haines] has laid out.”
The warnings come amid a months-long standoff between President Biden and Republicans, and days after Treasury Secretary Janet L. Yellen projected that the United States could default on its debts “by early June, and potentially as early as June 1,” without congressional approval to raise the nation’s debt limit.
“I do believe the majority of the members of Congress know that that is the wrong path to go down,” Young said. “Look, we saw the partisan process play out. Now we need to pivot to a bipartisan process. That’s the only thing that’s going to make it to the president’s desk and avoid default.”
Biden this week invited congressional leaders — including House Speaker Kevin McCarthy (R-Calif.) and Senate Minority Leader Mitch McConnell (R-Ky.) — to a May 9 meeting at the White House to try to break the impasse.
Biden has insisted that Congress vote to increase the debt ceiling with no conditions attached — as Republicans and Democrats did three times during the administration of his predecessor, President Donald Trump. But Republicans in control of the House with a Democratic president have demanded deep spending cuts in exchange for raising the debt limit.
The limit is a cap on the total amount of money that the United States is authorized to borrow to fund the government and fulfill its financial obligations. It is not new spending, but rather allows the country to spend money on programs that Congress has authorized.
Young also expressed skepticism over a GOP bill that passed narrowly in the House last week that would raise the debt limit only in conjunction with significant cuts and a rollback of several of Biden’s top programs, mostly those dealing with climate change.
The bill stands no chance in the Democratic-led Senate, and Biden has said he would veto it.
“I’ve done appropriations a long time. Something tells me those top lines in that [GOP] bill — there are many Republicans who could not vote for bills that actually told the American people by line item what it means,” Young said, referencing potential cuts to veterans benefits and services, cancer research and other areas.
“I know people want to take defense off the table. What about our research? What about manufacturing?” she added. “All the progress we’ve made in bringing manufacturing back to this country: Why would we, at this moment in time, with the progress we’ve seen — in unemployment, manufacturing jobs, making it in America — why would we do anything in this country to not only halt but reverse that, with having a made-up fight that could be ended tomorrow?”
White House economists said in a new analysis released Wednesday that an extended breach of the nation’s borrowing limit could wipe out more than 8 million jobs and cause “severe” economic damage.
On Thursday morning, Democrats on the Senate Budget Committee led a hearing highlighting what they said would be the deleterious effects of the GOP’s budget bill, with witnesses warning repeatedly of “financial calamity” if the United States defaulted on its obligations.
On Tuesday, House Democrats began a process — described by many as an absolute final option — that could allow them to bypass the chamber’s Republican leaders in passing legislation to raise the nation’s debt ceiling with the support of a handful of GOP lawmakers.
House Minority Leader Hakeem Jeffries (D-N.Y.) said Democrats had crafted a “special rule” that could allow a bipartisan measure to be considered on the House floor through use of a “discharge petition” — a procedure that is cumbersome, time-consuming and rarely successful. Such a petition would require 218 votes to discharge, or release a bill from committee, to start the process for a vote in the full House.
John Wagner and Marianna Sotomayor contributed to this report.