Round 1 in the Debt Limit Fight
The Debt

Round 1 in the Debt Limit Fight

Reuters/Elizabeth Frantz

The slowly unfolding fight over the debt limit and federal spending will inch forward on Wednesday as President Joe Biden and House Speaker Kevin McCarthy meet, their first such sit-down since Republicans took control of the House and McCarthy won the speaker’s gavel.

The White House said the meeting would cover “a range of issues.” The debt limit is clearly on the list. The Biden administration is adamant that it will not negotiate over the debt ceiling. “I will not let anyone use the full faith and credit of the United States as a bargaining chip,” Biden said last week.

The White House says it is the responsibility of Congress to raise the borrowing limit without conditions in order to avoid a potentially catastrophic default. “The President will ask Speaker McCarthy if he intends to meet his Constitutional obligation to prevent a national default, as every other House and Senate leader in U.S. history has done, and as Leaders McConnell, Schumer, and Jeffries have pledged to do,” a White House spokesman said. “He will underscore that the economic security of all Americans cannot be held hostage to force unpopular cuts on working families.”

McCarthy insists the United States won’t default — but he has promised hardliners in his party that he’ll push for spending cuts in exchange for raising the debt limit. “I want to find a reasonable and a responsible way that we can lift the debt ceiling, but take control of this runaway spending,” McCarthy told CBS News’s “Face the Nation” on Sunday.

Republicans have yet to lay out what cuts they are proposing, but McCarthy on Sunday said he wants to take Social Security and Medicare off the table. He left open the possibility of reducing defense spending. “I want to make sure we're protected in our defense spending, but I want to make sure it's effective and efficient,” he said. “I want to look at every single dollar we're spending, no matter where it's being spent. I want to eliminate waste wherever it is.”

Republicans will soon have to tip their hand, though, as Politico’s Caitlin Emma points out. “GOP lawmakers say they’re committed to adopting a budget plan for the coming fiscal year, which would reflect where they’d slash government funding,” she writes. “Passing a budget is guaranteed to be a painful test for the new majority. It’s one thing to call for fiscal responsibility — it’s another to be the political face of program cuts. GOP leaders will have to thread the needle between members loath to cut Pentagon funding and conservatives like Rep. Jim Jordan (R-Ohio) and Sen. Rand Paul (R-Ky.), who say military cuts must be on the table.”

McCarthy on Sunday emphasized that he wants to put the federal budget on a path to balance — though, as we detailed last week, doing so without raising any new revenue would be extremely challenging, or essentially impossible if major areas of the budget are deemed to be off limits.

McCarthy has downplayed those challenges with talking points that make it sound like balance can be achieved simply by eliminating waste from discretionary spending. “I think the rational position here is sit down, eliminate the waste and put us on a path to balance,” he said Sunday.

The bottom line: McCarthy is trying to ramp up pressure on the White House, but he’s in a difficult position himself, having promised his conservative members that he’d only agree to support an increase in the debt limit in exchange for a “budget agreement or commensurate fiscal reforms.” That’s why Democrats are pressing McCarthy for details on what spending he wants to cut. “The plan is to get our Republican colleagues in the House to understand they’re flirting with disaster and hurting the American people. And to let the American people understand that as well,” Senate Majority Leader Chuck Schumer told Politico. “And I think we’ll win.”