House Speaker Kevin McCarthy, R-Calif., expressed his growing concern on Tuesday regarding President Joe Biden’s reluctance to negotiate to increase the country’s borrowing limit. McCarthy wrote a letter to the president stating that the White House’s stance could hinder the US from fulfilling its financial obligations, potentially leading to severe consequences nationwide.
Instead of initiating direct discussions on raising the debt ceiling, which Democrats agree is necessary, Biden and Democratic lawmakers are challenging Republicans to present their budget proposals publicly. McCarthy has refused to do so thus far.
The Treasury Department employs “extraordinary measures” to prevent defaulting on the nation’s $31.4 trillion borrowing authority. However, these measures could be exhausted as early as June, placing the US at risk of being unable to pay all its bills.
The White House has clarified that Biden is not open to entertaining proposed program cuts in exchange for raising the debt limit. Nevertheless, McCarthy and Republicans demand that he do so for debt ceiling legislation to progress. This increasingly tense situation could negatively impact the economy in the upcoming months.
In his letter, McCarthy reminded Biden of their meeting two months ago to discuss a way forward on the debt limit. He criticized the president and his team for lacking meaningful follow-up on this pressing deadline. McCarthy urged Biden to put aside partisanship, collaborate, and schedule their next meeting by the end of the week.
The White House asks Republicans to reveal their plans, as many voters might not support the proposed cuts. Only the House Freedom Caucus, consisting of some of the House’s most conservative members, has presented a proposal. Their plan involves reverting to the fiscal year 2022 spending levels, allowing 1% annual growth for the next decade, rolling back $400 billion in Biden’s student loan relief, and reclaiming all unspent COVID-19 funds.
The White House has criticized the Freedom Caucus’s proposals as leading to severe cuts that could jeopardize the safety of Americans, such as reducing federal support for local law enforcement and undermining security at airports.
Republicans argue that voters have mandated them to decrease future deficits and strengthen the country’s financial position in the long term. They accuse the White House of provoking the standoff and attempting to shift blame for any potential economic damage. Meanwhile, Democrats believe pressure on Republicans will continue to mount, resulting in a clean debt ceiling increase without spending-cut compromises.
In his letter, McCarthy proposed several options for cutting federal spending, including reducing non-defence spending to pre-inflation levels, reclaiming unspent COVID funds, strengthening work requirements for those receiving federal assistance without dependents, and implementing policies to lower energy costs and secure the US-Mexico border.
McCarthy has urged President Biden to take action and schedule their next meeting to address the debt ceiling. Democrats are calling on Republicans to agree on a clean debt ceiling bill without spending-cut trade-offs. Meanwhile, concerns about the US economy grow as recent bank failures in California and New York increase the mounting pressure.
