McCarthy unveils long-awaited GOP plan to raise debt limit, cut federal spending

House Speaker Kevin McCarthy on Wednesday unveiled a long-awaited GOP proposal to lift the debt limit and enact federal spending cuts.

Speaking on the House floor, McCarthy outlined what's included in the so-called Limit, Save, Grow Act, designed to raise the debt limit into next year and also provide more than $4.5 trillion in savings.

"The American people have elected a divided government, and our government is a divine compromise," McCarthy said. "That is why the House, the Senate and the White House should be negotiating a responsible debt limit increase right now."

The legislation would claw back unspent COVID-19 money, block federal student loan cancellation, rescind billions of dollars for the Internal Revenue Service provided by the Inflation Reduction Act, end green tax credits and put in place stricter work requirements for federal aid programs. It would also limit government spending to pre-inflationary, fiscal year 2022 levels and limit spending increases to 1% per year, according to McCarthy.

President Joe Biden, who gave the proposal a chilly reception, last met with McCarthy to discuss the debt limit in February. Their standoff has intensified in recent weeks as lawmakers stare down a fast-approaching summer deadline to lift the debt ceiling or risk an economically catastrophic default.

In recent days, the House speaker has tried to amp up pressure on Biden and Democrats to negotiate. Biden and other party leaders have so far declined to do so as they push for a "clean" debt limit increase not tied to federal spending cuts.

"President Biden is skipping town to deliver a speech in Maryland, rather than sitting down to address the debt ceiling," McCarthy said on Wednesday. "He's giving America's debt the Southern border treatment: ignore it and hope that it goes away."

Biden shot back at the Republican leader during his Maryland event, taking aim at McCarthy's debt ceiling comments delivered Monday at the New York Stock Exchange.

"They say they're going to default unless I agree to all these wacko notions they have. Default would be worse than totally irresponsible," Biden said.

Biden warned a default "would destroy this economy. And who do you think will hurt the most? You, hardworking people, the middle-class, neighborhoods I got raised in -- not the super wealthy or the powerful, but working folks."

The legislative text of the House GOP bill, which clocks in at 320 pages, was released shortly after McCarthy's remarks.

McCarthy said the chamber will vote as early as next week on the plan. While it's not yet clear he'll have the 218 votes necessary to pass it, he expressed optimism about its prospects.

"We're going to get there," he told reporters. "I never give up. We'll get them."

-ABC News' Gabe Ferris, Justin Gomez contributed to this report.