President Biden on Tuesday panned the plan proposed by House Speaker Kevin McCarthy (R-CA) to swap spending cuts in exchange for agreeing to raise the debt ceiling.
The House Republicans’ plan includes limiting federal spending increases to 1% a year for ten years. Biden lambasted the proposal as requiring “huge cuts to important programs” that millions of American households depend on.
The federal government reached its $31.4 trillion borrowing limit on January 19, at which time Treasury Secretary Janet Yellen told Congress the country could undertake “extraordinary measures to prevent the United States from defaulting on its obligations.”
However, both Yellen and the non-partisan Congressional Budget Office (CBO) have warned that those measures are likely to be exhausted sometime this summer, possibly as early as June. Analysts have further warned that defaulting on U.S. debt—which has never happened before in the history of the country—could cost the economy trillions of dollars in jobs, benefits and stock losses.
In remarks from the White House Tuesday, Biden said that McCarthy “threatened to be the first one to default on the debt, which would throw us into a gigantic recession and beyond unless he gets what he wants in the budget.”
President Biden and McCarthy have met once to talk about the debt ceiling, on February 1. Since then, Biden has said he would engage again when Republicans reveal the details of their spending plan—free of any connection to the debt limit. Biden unveiled his own budget proposal in March, which advocated raising taxes on Americans who earn more than $400,000 a year.
One day after making his case on Wall Street, McCarthy on Tuesday attempted to whip House Republicans behind closed doors to support his proposal. However, some members of the ultra-conservative Freedom Caucus have complained that the plan lacks specificity, and they’re also asking for even deeper cuts.
If McCarthy does succeed in getting the Republican-controlled House to agree to pass his debt ceiling proposal, which includes undoing much of the White House’s climate change agenda, the plan has very little chance of passing as-is in the Democratic-controlled Senate.
“The reality is that in a negotiation, you never get everything you want,” Rep. Dusty Johnson (R-SD) told CNN on Tuesday. “And so I think our biggest issue right now is how do we squeeze these thousands of desires down to a manageable and credible number of asks?”
