House Speaker Kevin McCarthy sent a letter to President Joe Biden on Tuesday demanding negotiations start on raising the US debt limit and outlined proposed spending cuts and regulatory changes that House Republicans would like to see attached.
(Bloomberg) — House Speaker Kevin McCarthy sent a letter to President Joe Biden on Tuesday demanding negotiations start on raising the US debt limit and outlined proposed spending cuts and regulatory changes that House Republicans would like to see attached.
Biden and McCarthy last met on Feb. 1 to discuss raising the debt ceiling, which was reached in January and must be increased sometime this summer when Treasury runs out of accounting moves to stave off a payments default on US obligations.
“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 said in the letter.
McCarthy discussed the letter with Republicans at a morning meeting Tuesday and urged them to unite behind his approach.
The White House immediately responded that the GOP must agree to a debt ceiling increase without conditions. It also demanded that the party put forth a full budget proposal, something that has yet to emerge from the House.
“It’s time for Republicans to stop playing games, agree to pass a clean debt ceiling bill, and quit threatening to wreak havoc on our economy. And if they want to have a conversation about our nation’s economic and fiscal future, it’s time for them to put out a budget – as the president has done with his detailed plan to grow the economy, lower costs, and reduce the deficit by nearly $3 trillion,” said White House spokeswoman Karine Jean-Pierre.
McCarthy told CNBC that the White House insistence on a budget before talks makes little sense. He said the budget has “nothing to do” with the debt ceiling since it is just a Republican only proposal.
The McCarthy letter and White House response illustrates how deep the debt ceiling standoff has become.
One of McCarthy’s key allies, Financial Services Chairman Patrick McHenry, on Tuesday said at an event hosted by Punchbowl News he’s pessimistic about a debt-ceiling increase given the hardened positions.
McCarthy suggested attaching a series of legislative proposals to the debt ceiling increase, including cutting domestic appropriations, getting back unspent Covid-19 funds, adding more work requirements to government benefit programs and loosening regulations on energy projects.
“We cannot solve the nation’s fiscal problems overnight and House Republicans are not demanding that we do so,” the letter states.
However, the letter does not insist on any one proposal as the priority, a sign of possible flexibility.
While House Republicans had planned to release a 10-year budget program before April, which has been delayed. The party has proposed cutting $130 billion from domestic agencies in fiscal 2024 and conservatives would like to see future growth of those accounts capped at 1% per year.
–With assistance from Jordan Fabian.
(Updates with new information starting in the fourth paragraph)
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