House Republicans “will not budge” on the demand for federal spending cuts in return for agreeing to lift the debt ceiling and avoid US default payments, GOP Representative James Comer said.
Republicans who gained control of the House in the US midterm elections “campaigned on the fact that we are going to be serious about spending cuts,” Comer, who leads the House Oversight Committee, said on CNN’s “State of the Union.”
The Democratic-led Senate “needs to recognize the fact that we’re not going to back down until we see meaningful reform on spending,” he said.
Prospective talk of raising the debt ceiling is quickly emerging as a global flashpoint. US Treasury Secretary Janet Yellen said last week the department will start taking special accounting maneuvers on January 19 to avoid breaching the debt limit and urged lawmakers to raise the ceiling to prevent US debt.
“The debt ceiling is definitely going to be a knife fight,” Representative Tony Gonzales, Republican of Texas, said on “Fox News Sunday.”
Yellen’s warning kicks off what could be a long political battle over US fiscal policy, a showdown that could roil financial markets and raise the stakes for an economy that is battling inflation and already faces the risk of recession. Economists expect the Treasury to run out of cash by August if the debt ceiling is not raised.
Rep. John Garamendi, a Democrat from California, said using the debt ceiling as leverage could backfire on Republicans.
“Republicans should learn from their own history that using the debt limit as a lever to gain some sort of political advantage or some policy change really does not work well for them and is bad for the American economy,” he said on Fox News.
Some economists and bond strategists warned of the risk of unrest seen in 2011, when the default on the debt ceiling caused S&P Global Ratings to downgrade the US from AAA. Equities tumbled around the world and US consumer confidence took a hit.
-With assistance from Ian Fisher.
Learn how to navigate and strengthen trust in your business with The Trust Factor, a weekly newsletter that examines what leaders need to succeed. Log in here.