President Joe Biden and the new Republican speaker of the House of Representatives, Kevin McCarthy, face off Wednesday at the White House to discuss the US debt standoff – but so far apart they can’t even agree on how to describe their get-together.
At stake is the stability of the US economy.
Republicans are threatening to block the usually rubber stamp approval for raising the nation’s credit limit if Democrats don’t first agree to steep future budget cuts. The White House, meanwhile, accuses the Republicans of taking the economy “hostage” in order to exact politically motivated budget concessions.
Fail to raise the debt ceiling by around June, the Treasury says, and the United States will be forced into default on its $31.4 trillion debt – a historic first that would leave the government unable to pay bills, undermine the US economy’s reputation, and likely panic investors.
McCarthy said in a tweet Tuesday, he’s going “to negotiate for the American people.”
Biden, though, doesn’t even want to hear the word negotiation when it comes to the debt ceiling. “The president firmly believes there should be no negotiation over this,” as Biden’s national security spokesman John Kirby said Tuesday.
There have been other showdowns over the years when Republicans balked at allowing US debt to spiral ever higher. But on most occasions the dispute was quickly smoothed over, Congress extended the ceiling and the economy kept going without a hiccup.
This time, the political heat is so high that things may be different.
Two years through his first term, Biden is widely expected to be on the cusp of announcing his bid for a second term in the 2024 election. And Republicans, who have just taken over control of the House, are eager to show their muscle.
Even if McCarthy is minded to show flexibility, his power in Congress depends almost entirely on the desires of a far-right group of Republicans who are more likely to play chicken, regardless of the global financial consequences.
The White House says it won’t allow the current debt ceiling to be part of any negotiation on future government spending because that $31.4 trillion is money already agreed to by Congress. In other words, refusal to raise the debt ceiling would be like refusing to pay an already existing credit card bill.
There could be room for negotiating on changes to future budgets.
McCarthy says his goal is to tackle “runaway spending.”
But when it gets down to brass tacks, it’s hard for either party to say where they can find significant reductions — unless they go into the usually politically untouchable Social Security, Medicare, Medicaid or other government subsidized healthcare.
Biden is signaling he wants to call McCarthy’s bluff by insisting that the Republicans lay out where exactly they’d 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, challenged McCarthy to publish 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.
McCarthy insisted ahead of the meeting that he is “not interested in political games.”
But in comments to supporters Tuesday, Biden described McCarthy as a “decent man” who had become beholden to his far right, after an embarrassingly prolonged fight for enough votes to win the House speakership.
“He had to make commitments that are just absolutely off the wall for a speaker of the House to make in terms of being able to become the leader,” Biden said.