House Speaker Kevin McCarthy on Tuesday tried to crank up the pressure on President Joe Biden to reengage in discussions about raising the debt limit.
In a letter to the president and an interview on CNBC, the California Republican called on the president to set a date for another meeting on the matter and do it quickly. The two men held their first and only meeting on the debt limit on February 1.
“With each passing day, I am incredibly concerned that you are putting an already fragile economy in jeopardy by insisting upon your extreme position of refusing to negotiate any meaningful changes to out of control spending alongside an increase of the debt limit,” McCarthy wrote, adding, “Mr. President, simply put: you are on the clock.”
The $31.4 trillion debt limit will need to be raised sometime this summer, before the Treasury Department exhausts the accounting maneuvers it has been using to stave off default and a potential economic meltdown.
Biden and the White House insist that Republicans must raise the debt limit as they did multiple times under former President Donald Trump and that discussions about federal spending cuts should be handled separately. Biden released his budget proposal earlier this month, including nearly $3 trillion in deficit reduction over 10 years and tax increases for the rich and corporations. He has repeatedly called on House Republicans to release their own budget and detail the spending cuts they favor.
“It’s time for Republicans to stop playing games, pass a clean debt ceiling bill, and quit threatening our economic recovery,” White House Press Secretary Karine Jean-Pierre said in a statement responding to McCarthy’s letter. “The President welcomes a separate conversation about our nation’s fiscal future.”
Senate Majority Leader Chuck Schumer called for McCarthy to release his budget. On Twitter, he asked what the point would be for Biden and McCarthy to meet otherwise: “if Speaker McCarthy comes with no specific plan—what are they going to talk about, the weather?”
In the absence of a GOP budget plan, which has also been delayed as Republicans try to hammer out their internal differences, the White House has been attacking other GOP proposals and arguing that the Republican agenda would only add to the deficit. “All we’ve heard from them is a list of devastating cuts to law enforcement and border security and proposals to take health care away from Americans and raise health care and child care costs,” Jean-Pierre said. “All to pay for their tax giveaway to the super-wealthy and corporations.”
What McCarthy wants: McCarthy told CNBC that negotiations could proceed even without a formal House Republican budget, saying that the two issues were like apples and oranges. “Let’s be very honest about it: The budget doesn’t have anything to do with the debt ceiling,” he said, even as Republicans have sought to link the two issues to force spending cuts. “I can pass a budget tomorrow and we’ll still need to pass a debt ceiling [increase].”
McCarthy’s letter touched on a handful of broad ideas that he later told CNBC would generate $4 trillion in savings.
The proposals included:
- Cutting non-defense spending to fiscal year 2022 levels and limiting future growth;
- Reclaiming unspent Covid-19 funds;
- Adding more work requirements to federal safety net programs;
- Enacting measures to lower energy costs (read: easing energy regulations);
- Securing the border “from the flow of deadly fentanyl.”
“Taken together, such policies would help the number one issue facing Americans today: stubbornly high inflation brought on by reckless government spending,” McCarthy wrote.
But his letter lacked the kind of specifics that the White House has demanded or the details that would appear in a full budget plan. “McCarthy’s letter doesn’t say how substantially House Republicans want to cut domestic spending, which programs they want to curtail with work requirements ... or what energy and border security policies they see,” Politico’s Jennifer Scholtes writes.
What it means: McCarthy is looking to negotiate now before the deadline nears and pressure builds on Republicans to raise the debt limit and avoid any economic fallout from a fiscal showdown. But the comments from both sides Tuesday show just how far apart they remain on just the idea of negotiations. At the moment, this is mostly a messaging battle. “McCarthy and his team still believe that they have the upper hand on the debt ceiling in the sphere of public opinion if they continue to show a pattern of trying to get Biden to sit down and he refuses to do so,” CNN’s Alayna Treene wrote.
But the longer such a standoff drags out without progress, the higher the chances of default, especially if McCarthy and the most conservative members of his caucus insist that their demands be met. Rep. Patrick McHenry (R-NC), chair of the House Financial Services Committee, told Punchbowl News Tuesday that he is increasingly pessimistic that a debt limit increase can get done. “I don't see how we get there,” he said. “And this is a marked change from where I've been. I don't even see a path."
Bloomberg’s Laura Litvan suggests a long-term deal to cap spending similar to the one reached in 2011 may be out of reach. “The growing partisan divide and wafer-thin majorities in each chamber are pointing the way toward a shorter-term agreement — if the two parties can reach one at all,” she writes. “The mixed success of that 2011 deal, which never lived up to its hype, suggests that could be for the best.”
The bottom line: There’s still time to raise or suspend the debt ceiling, but the two sides are dug in and Congress is heading out of town at the end of the week until the middle of April, making it unlikely that they’ll make progress anytime soon. The Republican Study Committee, a group of about 170 conservatives, reportedly plans to put out its own budget proposal when lawmakers get back to the capital. The House GOP budget may not come out until weeks after that.
