To prevent a catastrophic default, Biden and Republicans will meet on Tuesday.

The White House summit between President Joe Biden and Republican leaders Tuesday will set in motion a power struggle whose outcome could impact the global economy and could upset the 2024 US presidential election. The immediate issue is raising the debt ceiling, an arcane budgeting procedure that most years passes with little controversy. Biden accuses Republicans of "hostage" taking, insisting that the debt ceiling first be raised and then can he and the Republicans discuss cutting the budget to reduce that decades-old accumulated debt, currently the world's biggest at $31 trillion. The debate has turned into a life-or-death test of political strength, with both sides dug in and the deadline approaching, the debate has turned into a life-or-death test of political strength. If the government fails to authorize more borrowing, the government will run out of money and default, leading to worldwide panic, interest rates, stock sell-offs, Treasury bond downgrades, and near certain US recession.

Even getting close to a breach of the US debt ceiling could cause significant disruptions, warned a White House analysis. The White House is clinging to an "irrational, reckless" strategy and Democrats are "terrified" about allowing Joe Biden to negotiate. Biden is not budging, as a strong economic recovery from the Covid era is one of his main cards in his bid for a second term. He is also adamant about not caving into the Republican attempt to link budget negotiations to the debt ceiling, saying this will transform a basic, fundamental obligation into a political football. Analysts say there are several potential exit ramps from imminent default, such as punting, extending the debt ceiling for a few weeks, or invoking a constitutional power to bypass Congress altogether and unilaterally authorize more borrowing. The White House has not ruled out invoking a constitutional power to bypass Congress altogether and unilaterally authorize more borrowing, but there are no easy options.