Speaker of the House Kevin McCarthy (R-Calif.) warned in a March 28 letter that there could be “dire ramifications” for “the entire nation” if President Joe Biden refuses to negotiate with Republicans on the debt ceiling.
Biden has taken a hard line on the debt ceiling since Republicans took the House, suggesting that he will not allow Republicans to use the issue to force compromises. Republicans, on the other hand, hope to use the issue to force Biden to give concessions and reduce federal spending.
Two months ago, at the start of the 118th Congress, Biden nevertheless indicated a willingness to meet with McCarthy to discuss the dispute. This public willingness to talk, McCarthy said, has not translated to negotiations between the two leaders.
“Since that time, however, you and your team have been completely missing in action on any meaningful follow-up to this rapidly approaching deadline,” McCarthy said in his letter to the president.
By Biden’s refusal to meet with him, the speaker said, “[Y]ou 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 government spending alongside an increase of the debt limit.”
Since taking office, Biden has signed off on trillions in spending, including the $1.9 trillion American Rescue Plan, the $1.2 trillion Infrastructure Investment and Jobs Act, the $745 billion Inflation Reduction Act and, most recently, a $1.7 trillion omnibus package rushed through Congress at the end of the last Congress.
Republicans have long blamed this spending for the rise in consumer prices, and have said since the 117th Congress that cutting spending would be a top priority for the party if they took the House.
McCarthy told Biden that if he continues to refuse to negotiate, any debt ceiling crisis would be his fault.
“Your position—if maintained—could prevent America from meeting its obligations and hold dire ramifications for the entire nation,” McCarthy wrote.
‘No Interest in Brinksmanship’
McCarthy added to the president that he had “no interest” in playing political brinksmanship with the debt ceiling.
Rather, he said, “[I have interest] only in doing what is best for the American people.”
During a March 28 press conference, House Majority Leader Steve Scalise (R-La.) echoed the sentiment.
Biden, Scalise alleged, is “trying to cause a debt crisis by waiting and waiting and waiting [to meet with McCarthy] until the midnight hour.”
Congress is regularly tasked with raising the debt limit, which describes the congressionally-authorized U.S. borrowing limit. Without the green light from Congress to take on more debt, the Federal Reserve relies on so-called “extraordinary measures” to keep the government functioning.
According to projections from the Congressional Budget Office, the Federal Reserve’s “extraordinary measures” to keep the government funded will run out sometime between July and September of this year if Congress doesn’t authorize a debt limit increase.
In 2011, Republicans successfully used the debt ceiling issue to force major concessions from President Barack Obama.
However, the battle left the United States with a ding on its credit rating—a situation that both parties are anxious to avoid.
If the Congress does not authorize a debt ceiling increase before the Federal Reserve runs out of money, financial analysts say the results would be “catastrophic.”
Because the U.S. dollar is not backed by anything but the full faith and credit of the United States—which up to this point has a pristine credit rating—a failure to raise the debt ceiling would further decimate the value of the dollar, which has already lost a great deal of its value over the past two years.
In the letter, McCarthy laid out an overview of GOP expectations: he called for non-defense spending to return to “pre-inflationary levels,” the reclamation of unspent COVID-19 relief funds, strengthening of federal aid work requirements, and “[p]olicies to grow our economy and keep Americans safe.”
“Taken together,” McCarthy said, “such policies would help address the number one issue facing Americans today: stubbornly high inflation brought on by reckless government spending.”
McCarthy concluded: “Mr. President, 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.”
Any increase in the U.S. debt limit must be run through the House before it can head to the Senate or the president’s desk.
During the last Congress, facing GOP pushback to the debt limit in the Senate, some Democrats floated the idea for the Federal Reserve to mint a $1 trillion coin as an emergency measure—a suggestion which won the endorsement even of erstwhile moderates like Sen. Mark Warner (D-Va.).
If Republicans and the White House are unable to reach an agreement, Democrats could begin pushing for policies that would allow the government to remain funded without congressional authorization.
White House Responds
In a statement, White House Press Secretary Karine Jean-Pierre responded to McCarthy.
“Congress has a constitutional obligation to address the debt limit—as they did three times in the previous administration without conditions,” the White House said.
Jean-Pierre added that “the threat of a default risks the livelihoods of American small businesses, retirees, and working families and would hand a massive win to China.
“[R]ecent events underscore the need for Congress to address the debt limit as soon as possible,” she said. “It’s time for Republicans to stop playing games, pass a clean debt ceiling bill, and quit threatening our economic recovery.”
Meanwhile, she claimed “The President welcomes a separate conversation about our nation’s fiscal future,” but that the specific cuts requested by Republicans “don’t reduce the deficit at all.”
From The Epoch Times