House Speaker Kevin McCarthy (R-Calif.) sought to reassure investors on Friday that the US government will not see the first default on debt as a result of the showdown looming later this year over the debt limit of the Treasury Department.
In live comments from the hallway outside his office, McCarthy said: “Defaulting our debt is not an option. But there is no future of higher taxes, higher interest rates and a dysfunctional economy for working Americans.”
Although it was called an “address”, the speech, which took about 10 minutes, broke new ground in the standoff. The White House has said it will not negotiate over the limit; Republicans have said they want unspecified budget changes in return for lifting the debt ceiling, with the accompanying threat of failure to do so.
In response to McCarthy’s comments to reporters just minutes before they were posted, White House spokesman Andrew Bates said Republicans want to throw the economy into a tailspin through debt default.
“Tomorrow, President Biden will show the American people that he plans to build on the unprecedented deficit reduction that his leadership has accomplished by having taxpayers and the wealthiest big corporations pay an equal share and reducing the price of prescription drugs,” Bates said of the State Biden. Union Address Tuesday night.
In his speech, McCarthy repeated some points Republicans have made before they tried to paint the White House as absurd in wanting no strings attached to boost the debt limit. He said Social Security and Medicare were “off the table” and that Republicans would “maintain our ability to defend this country from threats abroad,” which could be seen as a promise of no defense spending cuts.
“Defaulting our debt is not an option. But there is no future of higher taxes, higher interest rates and a dysfunctional economy for working Americans.
– House Speaker Kevin McCarthy (R-Calif.)
The administration fought back against the $31.38 trillion limit in January, forcing the Treasury Department to put it into a bag of accounting maneuvers to avoid breaching it.
While the “extraordinary measures” will give the Treasury some time to start borrowing, it’s not clear how much extra time it will take. Treasury Secretary Janet Yellen has told lawmakers that she does not expect to breach the debt ceiling until at least early June but has not given a more specific timeline.
The battle over the debt limit in 2011 between the White House of Barack Obama and the Republican House brought the Treasury Department within days of the date it claimed it could no longer borrow or pay all the bills it had to pay. Although the deal was completed, the episode saw credit rating agency Standard & Poor’s downgrade the US debt rating for the first time.