President Joe Biden and Kevin McCarthy, the new speaker of the House of Representatives and a Republican, will debate the US debt stalemate on Wednesday at the White House. However, because of their ideological differences, they can’t even agree on how to phrase their meeting.
The US economy’s stability is in jeopardy.
If Democrats don’t initially agree to significant future spending cutbacks, Republicans are threatening to obstruct the customary rubber stamp approval for raising the country’s credit limit. The Republican Party is allegedly holding the economy “hostage” to extract politically driven budget concessions, according to the White House.
The US would be forced into a historic first default on its $31.4 trillion debt if the debt ceiling is not raised by approximately June, according to the Treasury. This would leave the government unable to make payments, damage the US economy’s reputation, and probably cause investors to panic.
In a tweet on Tuesday, McCarthy stated that he will “negotiate for the American people.”
But when it comes to the debt ceiling, Biden doesn’t even want to hear the word “discussion.” According to John Kirby, Biden’s national security spokesman, “the president clearly believes there should be no negotiation about this.”
Over the years, there have been numerous showdowns when Republicans resisted allowing the US debt to keep rising. But on the majority of occasions, the disagreement was soon resolved, Congress increased the cap, and the economy continued to function normally.
This time, things might be different because of how heated the political climate is.
Biden is two years into his first term and is widely anticipated to be close to announcing his candidature for reelection in 2024. And Republicans, who recently took control of the House, are keen to demonstrate their strength.
Even if McCarthy intends to be flexible, his ability to influence Congress largely hinges on the wishes of a far-right number of Republicans who are more likely to play chicken regardless of the effects on the world’s economy.
The White House asserts that because Congress has already approved $31.4 trillion in spending, it will not permit the present debt ceiling to be brought up in discussions about upcoming federal expenditures. In other words, a refusal to increase the debt ceiling would be equivalent to a refusal to pay a credit card charge that has already been incurred.
There might be potential for bargaining on adjustments to upcoming budgets. McCarthy claims that he wants to stop “runaway expenditure.”
But when it comes down to it, neither party can really explain where they can make big cuts, unless they look at politically sensitive areas like Social Security, Medicare, Medicaid, or other government-funded healthcare.
By demanding that the Republicans outline exactly where their budget cuts would be made, Biden is sending a message that he intends to call McCarthy’s bluff.
The National Economic Council’s Brian Deese and the Office of Management and Budget’s Shalanda Young urged McCarthy to provide a draught budget in a memo on Tuesday. On March 9, the White House will release its own, according to reports.
The two top Biden advisers explained that this is “so the American people can understand how House Republicans plan to decrease the budget.”