McCarthy wants a one-year debt ceiling increase due to spending cuts
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Mr. McCarthy said that he was not predetermining what would happen, and that President Biden was the one standing in the way. I want a debt ceiling that puts us on an economic path to make America stronger. It works for every American. But that cannot happen if the president continues to ignore the problem.”
What is the debt ceiling? The debt ceiling, also called the debt limit, is a cap on the total amount of money that the federal government is authorized to borrow via U.S. Treasury securities, such as bills and savings bonds, to fulfill its financial obligations. The United States needs huge sums of money to pay bills because of its budget deficits.
The limit has been hit. What do we do now? America’s technical debt limit was reached on January 19. The Treasury Department will begin using extraordinary measures to continue paying their bills. These measures are essentially fiscal accounting tools that curb certain government investments so that the bills continue to be paid. By June, those options may be exhausted.
What are the stakes? Once the government exhausts its extraordinary measures and runs out of cash, it would be unable to issue new debt and pay its bills. The government could wind up defaulting on its debt if it is unable to make required payments to its bondholders. Such a scenario could plunge the world into a financial crisis.
Can the government do anything to forestall disaster? There is no official playbook for what Washington can do. But options do exist. The Treasury could try to prioritize payments, such as paying bondholders first. Some of those Treasury bonds could theoretically be bought by the Federal Reserve in the event of a US debt default.
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McCarthy warned at the New York Stock Exchange on Monday that American debt was a “ticking time bomb” that needed to be taken care of.
President Biden for weeks has said House Republicans should present a budget proposal before he agrees to another meeting with McCarthy to negotiate any compromise. He also says any debate on federal spending should take place around the debate this fall on spending bills, not around a measure to increase the debt ceiling.
The speaker complained about the president’s posture, saying “enough is enough” and vowing House Republicans would act on their own. He added, “this is not how the leader of the free world should act. The crisis that you want to avoid is the consequence of your partisan political games: dependency on China, increased inflation, and threatening Medicare and Social Security.
Spending policies and tax proposals from both Republican and Democratic administrations have contributed to the current national debt level, despite the speaker’s assertion that Democrats are to blame for the trillions in federal debt.
The speaker said that as a Senator, Biden supported attaching spending reforms to lift the debt ceiling, and that the debt limit cannot be passed with no strings attached.
McCarthy also said the bill would claw back unspent federal funds earmarked to respond to the pandemic, now that the President signed Republican legislation ending the federal emergency to the public health crisis.
House Republicans plan to introduce work requirements for adults who aren’t related to someone who is on food stamps. TheIncentives matter. McCarthy said that the incentives are out of whack.
If House Republicans can ever agree with themselves on how much they want to tax the wealthy, well-off and well-brought-up, then Democrats will evaluate the bill.
Schumer said that the proposal was recycled a bunch of the same things he has been saying for months and that it was not a serious proposal. The ball never moved forward an inch.
White House Deputy Press Secretary Andrew Bates said in a written statement Monday that McCarthy “failed to clearly outline what House Republicans are proposing and will vote on, even as he referenced a vague, extreme MAGA wish list that will increase costs for hard-working families, take food assistance and health care away from millions of Americans, and yet would enlarge the deficit.”
There are national security implications for Congress if it fails to increase the credit limit and pay bills, according to analysts at the Peterson Institute. A fact sheet circulated by the group says it could boost China and Russia while “sowing irreparable doubt among even our closest allies not just about US financial commitments, but about any promises we have made to other countries.”
If Speaker Kevin McCarthy cannot get out of a debt trap he has set for President Joe Biden, millions of Americans will face massive consequences.
The Republican from California traveled to Wall Street on Monday to give a fresh warning that the House will refuse to lift a cap on borrowing unless Biden agrees to spending cuts that will effectively ruin his domestic agenda and destroy his White House legacy.
McCarthy made it clear that he would not let the US government default on its obligations, which could cause a recession, lead to job cuts, and halt Social Security payments, all of which are consequences of the debt ceiling not being raised.
The risk to Americans: How Congress can cut back on the debt burden of a nation with more than it makes with a borrowed $tilde$
The risk to Americans comes here. It’s hard to see how a rookie speaker, with a tiny majority and a conference containing plenty of extremists, can engineer either of these outcomes.
The legislature does not need to raise the borrowing threshold. The quirky situation in the US has made for a once routine duty to be an opportunity for political silliness. Since the government spends more than it makes in revenue, it must borrow money to service its debt and pay for the things Congress has already appropriated. Despite one previous downgrade from the threat of default, the US has always been given more credit since it pays its bills and has a stellar credit rating.
In effect, McCarthy will set up a severe test of his leadership since there’s no guarantee that he can pass the measure in a House where he can only lose four votes and in which there are few signs the fractious GOP can agree on what programs to cut and by how much. And even if the measure does squeeze through the House in the coming weeks, it will likely be an idealized Republican product on which Biden and the Democratic Senate will never bite. Any subsequent package that emerged would likely have some concessions that could splinter the GOP support.
“I think we got 218 to raise the debt ceiling,” McCarthy told CNN. “We’ve got a lot of consensus within the conference. We’ll get together and work through it.”
Source: https://www.cnn.com/2023/04/18/politics/mccarthy-biden-debt-ceiling/index.html
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The process that saw him make huge concessions to his most radical members and required 15 votes to win the speakership was farcical and may not be reassuring.
McCarthy might have immediate political ambitions, but with the debt ceiling, it will be Americans livelihoods and the global economy that are on the line.
Republicans seem to be having trouble with themselves, let alone Biden. Republican Rep. Dusty Johnson of South Dakota, who is helping to fashion the GOP’s position, said that while the party hopes to pass the initial bill next week, challenges remain.
“I think the hardest part is just that there are an unlimited number of conservative policy victories that, of course, we all want to see worked in,” Johnson told CNN’s Manu Raju. You never get everything you want in a negotiation. And so I think our biggest issue right now is how do we squeeze these thousands of desires down to a manageable and credible number of asks?”
Republicans had little difficulty raising the debt limit when Donald Trump was president, which has caused some people to argue that they are hypocrites. The commander in chief of the Unites States is on videotape once again saying he couldn’t believe anyone would use the debt ceiling as a negotiating wedge. When Democrats are in office the Republicans often turn into fiscal hawks but look the other way when their own is in the Oval Office.
But are Republicans choosing the right hill for this battle when jobs, market-linked pension plans and the economic well-being of millions are at risk? The absolutist nature of McCarthy’s position pays little heed to a delicate balance of power. Democrats control the White House and the Senate, so in handing Republicans the House, albeit barely, voters might have been seeking compromise rather than confrontation.
There will be an explosion if we don’t take serious action to address American debt. How has the president responded to this issue? He has done nothing. So in my view, and I think the rest of America, it’s irresponsible,” he said.
GOP-controlled Congresses have had previous fiscal confrontations with Democratic presidents that didn’t fare well on Republicans. Presidents Bill Clinton and Barack Obama, for example, branded their foes in the House as economic arsonists and thereby gained political traction.
The problem with the debt limit is that Republicans have done it three times in the last administration and Presidents Reagan and Trump argued for it when they were in office.
Source: https://www.cnn.com/2023/04/18/politics/mccarthy-biden-debt-ceiling/index.html
Mitch McConnell and Chuck Schumer revisit the Capitol after a fall: What do Republicans really want to do about the debt crisis?
Republicans in the Senate have so far tried to avoid the mess. But Senate Republican leader Mitch McConnell did at least give his colleague in the House some moral support on Monday when he returned to the Capitol after convalescing after a fall.
President Biden won’t get to stick his fingers in his ears and refuse to listen, talk or negotiate. And the American people know that. The White House needs to stop wasting time and start negotiating with the Speaker of the House,” McConnell said, though notably didn’t volunteer to get involved.
McCarthy’s speech on Monday only furthered the impression that a damaging political crisis over the debt ceiling is, after months of simmering, moving toward a boil.
Chuck Schumer said on Monday that Speaker McCarthy went all the way to Wall Street and gave no more details, and that they were headed to default if he continued in this direction.
