Members of the House Freedom Caucus took a hardline position on Thursday against an increase in the debt ceiling divorced from meaningful reforms to the federal budget.
The debt ceiling, a statute established by Congress that prevents the government from spending beyond a predetermined national debt limit of $31.4 trillion, exceeded the threshold earlier this year. Treasury Secretary Janet Yellen said in a letter that her agency expects to default on obligations as early as June 1 unless the debt limit is soon amended.
The House Freedom Caucus, a bloc of conservative Republicans, previously said they would consider voting to raise the debt limit in exchange for a framework that returns expenditures to fiscal year 2022 levels, raises the debt ceiling only for the next year, and restricts annual spending growth to 1% over the next decade. House Speaker Kevin McCarthy (R-CA) recently passed the framework in the House by means of the Limit, Save, Grow Act.
The lawmakers, without whom McCarthy is unable to pass legislation because of the narrow Republican majority, reiterated that they will not support any other means to raise the debt limit, a vow which comes less than two weeks from the possible June 1 deadline.
“The U.S. House of Representatives has done its job in passing the Limit, Save, Grow Act to provide a mechanism to raise the debt ceiling. This legislation is the official position of the House Freedom Caucus and, by its passage with 217 votes, the entire House Republican Conference,” read a statement from the lawmakers shared with The Daily Wire. “The House Freedom Caucus calls on Speaker McCarthy and Senate Republicans to use every leverage and tool at their disposal to ensure the Limit, Save, Grow Act is signed into law. There should be no further discussion until the Senate passes the legislation.”
The statement was released two days after McCarthy and other congressional leaders met with President Joe Biden to continue debt limit negotiations. Both parties indicated that they had made progress on the matter, with a statement from the White House characterizing the discussion as “productive and direct” and remarks from McCarthy confirming that “it is possible to get a deal by the end of the week.”
Continued disagreements on the debt ceiling have made financial markets increasingly nervous as the deadline approaches: JPMorgan Chase CEO Jamie Dimon revealed this week that his investment bank created a “war room” that will monitor contingencies should lawmakers fail to make a deal to increase the debt limit, while Yellen and other officials are communicating with business leaders on the status of the government’s finances.
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A default would likely cause a recession as the federal government, a major borrower of funds that investors across the world broadly consider to be reliable, fails to repay obligations. The national debt, which now surpasses $31.7 trillion, is meanwhile a source of persistent financial risk for the United States and a damper on long-term economic growth. Elevated interest rates on the national debt have recently weighed on the budget as lawmakers are forced to devote more revenues toward servicing the obligations rather than funding programs.