Issued on: 02/01/2023 – 07:04
Washington (AFP) – President Joe Biden and new Republican Speaker of the House Kevin McCarthy face each other at the White House on Wednesday to discuss the US debt crisis – but so far they can’t even agree on how to describe their meeting.
The stability of the US economy is at stake.
Republicans are threatening to block normally sanctioned approval of the nation’s credit limit hike unless Democrats first agree to steep future budget cuts. The White House, meanwhile, has accused Republicans of holding the economy “hostage” to force politically motivated budget concessions.
If the debt ceiling isn’t raised by around June, the Treasury Department says the United States will default on its $31.4 trillion debt — a historic first that would leave the government unable to pay bills, would undermine the reputation of the US economy and likely panic investors.
McCarthy said in a tweet Tuesday that he would “negotiate for the American people.”
However, Biden does not want to hear the word negotiation when it comes to the debt ceiling. “The President firmly believes there should be no negotiations on this,” Biden’s national security spokesman, John Kirby, said on Tuesday.
There have been more showdowns over the years as Republicans have resisted allowing the US debt to continue to spiral higher. But most of the time, the dispute was settled quickly, Congress extended the cap, and the economy moved on without hiccups.
This time the political heat is so great that things can be different.
Biden is widely expected to be close to announcing his bid for a second term in the 2024 election, two years into his first term. And the Republicans, who have just taken control of the House, are eager to flex their muscles.
While McCarthy is careful to show flexibility, his power in Congress rests almost entirely on the wishes of a far-right group of Republicans who are playing chicken regardless of the global financial fallout.
Budget brass nails
The White House says it will not allow the current debt ceiling to become part of future government spending negotiations because that $31.4 trillion is money that Congress has already approved. In other words, refusing to raise the debt ceiling would be like refusing to pay a pre-existing credit card bill.
There could be room for negotiation of changes to future budgets.
Republican Speaker of the House Kevin McCarthy is pushing for US spending cuts but is under pressure to agree to an extension of the debt limit © SAUL LOEB / AFP
McCarthy says his goal is to tackle “uncontrolled spending.”
But when it comes to brass tacks, it’s hard for either party to know where to find significant discounts — unless they go to the normally politically untouchable Social Security, Medicare, Medicaid, or other federally-subsidized health care.
Biden signals he wants to call McCarthy’s bluff by insisting Republicans spell out exactly where they would make cuts.
In a memo Tuesday, Brian Deese, the director of the National Economic Council, and Shalanda Young, director of the Office of Management and Budget, urged McCarthy to release a draft budget. The White House will issue its own on March 9, they said.
That’s “so the American people can see how House Republicans plan to reduce the deficit,” the two senior Biden aides said.
Before the meeting, McCarthy said he was “not interested in political games.”
But in comments to supporters on Tuesday, Biden described McCarthy as a “decent man” committed to his far right after an embarrassingly long struggle for enough votes to win the House speaker.
“He had to make commitments that are grossly unreasonable for a House speaker to be a leader,” Biden said.
© 2023 AFP
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