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Last week, Treasury Secretary Janet Yellen surprised markets and political leaders when she informed Congress that the X Date for Treasury funding may be as early as June 1.  This leaves only three weeks for Washington to find an exit strategy for the government hitting the statutory debt ceiling.

Under Speaker McCarthy, the House Republicans were able to eke out a one-vote victory on their debt ceiling/spending plan.  The Republicans' bill would increase the debt ceiling by $1.5T or until April 1, 2024 whichever comes first.  It is combined with a massive deficit reduction program which would cut over $4.5T in spending over 10 years.  While it has been rejected by both Senate Democrats and the White House, it is a blueprint for where the House majority would like to go. It also was an impetus for renewed talks between McCarthy and the White House.

President Biden has invited McCarthy and the other Congressional leaders to the White House next Tuesday, May 9, to have their first face-to-face meeting on the debt ceiling since February. While the Senate leaders have been invited, Senate Republican Leader McConnell has been clear that for the time being he and his Senate Republican colleagues will follow the lead of Speaker McCarthy and the House Republica...

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