House Speaker Kevin McCarthy (R-CA) told lawmakers on Tuesday that Republican leaders are “nowhere near” a deal with the White House on the debt ceiling, a revelation that comes less than two weeks before the nation is expected to default on obligations.
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 affirmed in a letter that her agency expects to default as early as the first day of June unless the debt limit is soon amended. Republicans desire to link a temporary increase in the debt ceiling with spending caps, while Democrats say they prefer separate processes for debt limit negotiations and budget reforms.
McCarthy asked fellow Republicans in a closed door meeting to “hang with me on the debt limit” since he and President Joe Biden are “nowhere near a deal yet” with respect to spending reforms, according to comments obtained by Punchbowl News founder Jake Sherman.
“I told the president three things: no clean debt limit, no raising taxes, spend less money,” McCarthy said in the meeting, according to Sherman. The lawmaker showed his colleagues a video with a chronology of various Democrats refusing to negotiate on the debt limit. “They made a mistake to not negotiate. Let’s stay strong together.”
McCarthy has indeed noted on multiple occasions that Biden declined to continue discussions about the debt ceiling which were launched in early February, months before the possible deadline. A default would likely induce a recession as the federal government, a major borrower of funds that investors around the world consider to be reliable, neglects to repay obligations.
The comments from McCarthy come one day after another meeting with Biden on possible mechanisms to amend the debt ceiling. The commander-in-chief had characterized the discussions as “productive” and affirmed that “the only way to move forward is in good faith toward a bipartisan agreement” in a statement from the White House.
McCarthy repeated in a press release, however, that Biden “wasted months ignoring the crisis” and “risks bumbling into the first default in American history.”
Members of the House Freedom Caucus, a bloc of conservative Republicans, previously said they would vote to raise the debt limit in exchange for a budget 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. McCarthy recently passed the framework in the House by means of the Limit, Save, Grow Act.
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The lawmakers, without whom McCarthy is unable to pass bills because of the narrow Republican majority, reiterated last week that they will not support any other means to raise the debt limit. “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,” they said in a statement. “There should be no further discussion until the Senate passes the legislation.”
Beyond the risk of a financial crisis induced by failing to increase the debt ceiling, the national debt now surpasses $31.7 trillion and functions as a source of persistent financial risk. 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.