Debt ceiling impasse: McCarthy presses Biden to negotiate

Republican House Speaker Kevin McCarthy says he’s growing increasingly concerned about President Joe Biden’s unwillingness to negotiate on lifting the nation’s borrowing authority

ByKEVIN FREKING Associated Press
March 28, 2023, 11:08 AM

WASHINGTON -- House Speaker Kevin McCarthy, R-Calif., said Tuesday he's increasingly concerned about President Joe Biden's unwillingness to negotiate on lifting the nation's borrowing authority, saying in a letter to the president that the White House position could "hold dire ramifications for the entire nation.”

Rather than open direct talks on the debt ceiling, which the Democrats agree must be raised, Biden and his party's lawmakers are challenging Republicans to publicly present their own budget proposals — something McCarthy has so far declined to do.

For now, the Treasury Department has resorted to “extraordinary measures” to avoid default on the nation’s $31.4 trillion borrowing authority. But those measures will run out — and put the U.S. at risk of being unable to pay all of its bills — possibly as early as June.

The White House has emphasized that Biden is not willing to entertain proposed cuts in programs simply in exchange for lifting the debt limit. But McCarthy and Republicans are insisting he must for debt ceiling legislation to move ahead. The two sides are on a slow-motion collision course that could have negative implications for the economy in the months ahead.

“Nearly two month ago, you and I sat down to discuss a path forward on the debt limit,” McCarthy wrote. “Since that time, however, you and your team have been completely missing in action on any meaningful follow-up to this rapidly approaching deadline.”

He also told Biden, “Simply put: You are on the clock. It's time to drop the partisanship, roll up our sleeves, and find common ground on this urgent challenge. Please have your team reach out to mine by the end of this week to set a date for our next meeting.”

In a formal response to McCarthy released later Tuesday, Biden signaled that he would not be willing to meet directly with the speaker until House Republicans released their own budget proposal, and he asked McCarthy to do so before lawmakers leave Washington for the Easter recess later this week.

“We can agree that an unprecedented default would inflict needless economic pain on hard-working Americans and that the American people have no interest in brinksmanship,” Biden wrote. He said he would be willing to have a separate conversation with McCarthy on the nation’s fiscal outlook, but “for that conversation to be productive, we should both tell the American people what we are for.”

The White House believes that many voters would not look favorably on some of the proposals Republicans are urging.

“It's time for Republicans to stop playing games, pass a clean debt ceiling bill, and quit threatening our economic recovery,” said White House press secretary Karine Jean-Pierre.

So far, the House Freedom Caucus, which includes many of the House's most conservative members, has put forward a blueprint, which includes returning to fiscal year 2022 spending levels and allowing for 1% annual growth after that for the next 10 years. The plan also includes rolling back an estimated $400 billion in Biden’s student loan relief and clawing back all unspent COVID-19 funds.

The White House has seized on those Freedom Caucus proposals, saying they would lead to draconian cuts that would endanger Americans' safety, such as cutting federal support for local law enforcement, scaling back rail safety inspections and jeopardizing safety at U.S. airports while increasing wait times at TSA security check points.

Republicans in the House say voters gave them a mandate to reduce future deficits and put the country on firmer financial footing for coming decades. They are portraying the White House as inviting the standoff by refusing to negotiate.

“The one thing that is not going to be helpful is Washington playing this silly game of waiting to the last minute to do something,” said Rep. Byron Donalds, R-Fla. “And so I think what the speaker is doing is leading the country. Our hope is that the president joins us in that work."

But Democrats believe the pressure will continue to build on Republicans to allow for a clean debt ceiling increase — with no spending-cut trade-offs — and then lawmakers from the two parties can negotiate overall levels for federal agencies in spending bills for the coming fiscal year. The failures of Silicon Valley Bank in California and Signature Bank in New York have also added to concerns about how the threat of a default could impact the economy.

McCarthy listed several prospects for reducing federal spending in his letter to Biden. Among them:

— Reducing “excessive non-defense” spending to “pre-inflationary levels” and limiting growth in future years.

— Reclaiming unspent COVID funds that he says have sat dormant for more than two years.

— Strengthening work requirements for people without dependents who receive federal assistance.

— Enacting policies to lower energy costs and secure the U.S.-Mexico border.

McCarthy also briefed House Republicans on the letter during a closed-door meeting Tuesday, according to a person familiar with the private session and granted anonymity to discuss it. McCarthy told his colleagues that Biden misled them about the budget negotiations, which have essentially stalled since their first meeting Feb. 1, the person said.

Rep. Pete Aguilar, D-Calif., disparaged McCarthy's letter as consisting only of bullet points and called on House Republicans to both produce a budget and raise the debt limit, noting Congress lifted the ceiling three times during Donald Trump's presidency.

“The full faith and credit of the United States government should not be in question," Aguilar said. "The United States pays its bills.”

Senate Republicans have said it will be up to the administration and House Republicans to work out an agreement on the debt ceiling. Republican leader Mitch McConnell of Kentucky said earlier this year he couldn't imagine any kind of debt ceiling measure passing the Senate could also pass in the House, so the House should take the lead.

“We're very supportive of what the speaker is trying to do, and hopefully his letter, which laid out some specific solutions, will get the administration back to the table,” said Sen. John Thune, R-S.D.

But Senate Majority Leader Chuck Schumer, D-N.Y., said Republicans need to provide a plan to advance the issue and justify a meeting.

“If they were to sit down, you would have to ask yourself, what are they going to talk about? The weather?” Schumer said. “We have a plan. We want to pass the debt ceiling without hostage taking, without brinksmanship."

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AP Congressional Correspondent Lisa Mascaro and AP writers Stephen Groves and Seung Min Kim contributed to this report.

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