ACCOKEEK, Md. (AP) – President Joe Biden slammed an emerging Republican trade plan to raise the nation’s debt limit only in exchange for spending cuts and other policy concessions on Wednesday, saying GOP lawmakers threatened to default on U.S. obligations. “Unless I agree with all these wacko ideas.”
He said in a speech in the hall of the union when Speaker of the House of Representatives Kevin McCarthy, who has been fighting for months to unite Republicans on a unified budget proposal, launched a spending control plan to offer to the White House by increasing the debt limit by $ 1.5 trillion. .
But it is far from settled whether McCarthy has 218 Republican votes – the majority of the House – in favor of his proposal, which does not have a chance to become law in the Senate and is meant to kickstart negotiations with the administration. Heading into the crisis, if Congress and Biden do not agree to raise the limits in the coming weeks, the government will risk not being able to pay its bills and face defaults that will damage the economy.
This week’s split-screen presentation, which began with McCarthy giving a speech on Wall Street, clearly showed how Biden and his speakers spoke to two very different Americas.
Standing in a steel garage and workshop, Biden clearly noted the contrast, telling members of the International Union of Operating Engineers, Local 77 that “I was in the union hall with you, Speaker McCarthy finished talking to Wall Street two days ago.”
Biden argued that severely limiting government programs could hurt the middle class, which is already struggling to meet basic needs. And demanding concessions in exchange for paying off the national debt is “worse than irresponsibility,” Biden said, declaring that “America is not a dying nation.”
“Folks, that’s the MAGA economic agenda: Spending cuts for the working and middle class … with tax cuts for the top earners,” Biden said, referring to former President Donald Trump’s campaign slogan, Make America Great. again. “It’s not about fiscal discipline. It’s about cutting benefits for people … they don’t seem to really care.
Commenting well, McCarthy said, “President Biden skipped town to give a speech in Maryland instead of sitting down to address the debt ceiling.” He also stressed that House Republicans are the ones who are acting responsibly by insisting on curbing the federal government’s spending habits.
“If you give your child a credit card and they keep going over the limit, you’re not going to blindly increase the limit. You’re going to change their behavior,” McCarthy said. “The same is true with our national debt.”
The speaker went to the House floor shortly before Biden spoke Wednesday and detailed the GOP plan. It would, among other provisions, cancel billions in unused COVID-19 relief funds, cancel money to increase staff at the Internal Revenue Service, and end Biden’s efforts to cancel student loan debt up to $20,000 for millions of borrowers.
The plan would roll back spending to 2022 levels, and impose a 1% cap on most future federal spending for the next decade. The proposed debt limit increase will last for several years, putting the issue in the spotlight during the presidential campaign.
The California Republican says excessive government spending is fueling inflation, empowering China and threatening the future of Social Security and Medicare.
Biden and McCarthy, who must come together for the US economy, play different strategies for different audiences, each betting that they will win in the end.
To the extent that the two have involved each other – with no active discussion so far – it is only to provide fodder for attacks.
McCarthy said Biden was “bumbling” into default because he didn’t meet with her; Biden insisted that McCarthy had “threatened to be the first speaker to pay off the national debt” unless he got what he wanted in the budget.
Complicating matters for McCarthy, he faces pressure not to give ground from conservatives in the razor-thin House majority that earlier this year delayed his promotion to the speakership.
But Biden argued that spending cuts would put unacceptable pressure on the government to fulfill its constitutional responsibility to uphold those obligations. The GOP’s faith in tax cuts has led to deficits, he said.
Under the Republican proposal, the debt limit would be extended until next year, McCarthy said. He pressed the White House to negotiate a compromise with GOP lawmakers, noting that voters elected a divided Congress in mid-November.
So far this year, he said, Biden “has been avoiding the issue for 77 days straight and straight.”
Both men are veterans of the nasty debt ceiling battle of 2011, when Biden was vice president and McCarthy a relatively new member of the House Republican leadership. They know the risk of even edging close to the debt limit deadline, such as the first downgrade of the US credit rating that happened in the summer. For all the posturing, the market generally assumes that a deal will be reached as before.
But because they have been talking through each other, they rarely talk to each other. The president and the new Republican speaker sat down in early February, but there has been little substantive communication since. The White House, instead, has publicly pushed McCarthy to release the GOP budget plan detailing the proposed cuts — which Democrats say are anathema to voters.
Meanwhile, the White House is standing with Democrats on Capitol Hill who overwhelmingly insist that no concessions be made in exchange for the debt limit.
It is unclear whether McCarthy’s plan can get 218 votes – a House majority – and whether he will need to add other changes – such as repealing the Democratic climate, health care and tax law known as the Inflation Reduction Act – to persuade. hold Republican lawmakers.
Much of the rhetoric today is political posturing ahead of a deadline to raise the debt limit before the US hits the ceiling, which is a moving target but expected in the coming months. The White House has only reaffirmed its no-negotiation stance since Biden hosted McCarthy in the Oval Office, but most lawmakers and economists believe that eventually both sides will avoid default.
Wall Street companies – looking at tax revenues – think that the day of reckoning is near. Goldman Sachs this week estimated that the “x-date” could be reached in June, where the “extraordinary” measures taken by the Treasury Department to keep the government afloat will be exhausted and bills will begin to go unpaid.
Both parties could tone down the rhetoric by getting the U.S. government to default, said Brian Riedl, a senior fellow at the conservative Manhattan Institute. This can help build credibility and show good faith in discussions.
AP congressional reporter Lisa Mascaro and AP writer Kevin Freking contributed to this report.