Plenty of attacks on the debt cap, but no signs of settling

President Joe Biden waves after speaking in the Rose Garden of the White House in Washington, Monday, May 1, 2023, about National Small Business Week. (AP Photo/Carolyn Kaster)
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Associated Press

WASHINGTON (AP) — President Joe Biden and House Speaker Kevin McCarthy are finding it’s easy to publicly shame each other over the debt limit. Getting along well enough to resolve a paralyzing threat to the U.S. economy? That’s not happening yet.

McCarthy, R-Calif., shepherded a proposal for $4.8 trillion worth of deficit reduction over a decade through the House last week — figuring it could pressure Biden into an Oval Office sit-down to work toward a deal. Even some Democratic lawmakers say negotiations should start.

The president, for his part, is refusing to meet with McCarthy unless he also takes the risk of default off the table. Instead, Biden and his fellow Democrats are blasting Republicans over what could be deep cuts in aid for the middle class, vulnerable children, veterans and efforts to address climate change.

Adding to the stress, Treasury Secretary Janet Yellen issued a letter Monday saying that the “extraordinary measures” that have kept the government running could be exhausted as early as June 1. That could possibly give lawmakers less than a month to find a way to raise or suspend the debt limit.

On Monday, Biden and McCarthy each made a case to voters that reflects their talking points for the coming weeks as they try to leverage public opinion to their own advantage. The president wants to focus on the impact of the GOP’s likely spending cuts; McCarthy wants to portray Biden as childish for not negotiating.

Their arguments show the feedback loop between politics and the economy. The president last week launched his 2024 reelection campaign with a pledge to “finish the job,” but failure to reach a deal could cause the U.S. government to be unable to pay all of its bills at some point this summer and possibly push much of the world into a volatile recession that could upend next year’s voting.

In a White House speech celebrating small businesses, Biden portrayed the House Republicans’ plan as an attempt to extort spending cuts from the administration by putting the federal government at risk of default. He portrayed some of the backers of the bill as unreasonable extremists who are loyal to the “Make America Great Again” movement started by former President Donald Trump.

“We pay our bills and we should do so without reckless hostage-taking from some of the MAGA Republicans in Congress,” Biden said.

White House officials calculate that the House GOP bill would force a 22% slash to non-defense discretionary spending, putting housing vouchers, food aid and basic medical care at risk for millions of U.S. households. Biden on Monday cited a Moody’s Analytics report that there would be 780,000 fewer jobs next year if the bill became law.

But the wording of the GOP-sponsored legislation complicates the case. The House passed a bill with spending caps that avoid making specific cuts. Instead, it would place strict limits on how much the federal government could spend over the next decade and leave lawmakers to sort out the details.

In return for raising the debt limit by $1.5 trillion into 2024, House Republicans voted by a narrow margin to claw back unspent COVID-19 funds, put work requirements on government aid, cancel Biden’s plans to forgive student debt, put spending levels back at 2022 levels and place a 1% cap on growth going forward.

Speaking from Jerusalem on Monday, McCarthy said the need for talks to begin was reasonable and Biden’s resistance to doing so was the problem. The House speaker suggested that kids who watched the educational cartoon “Schoolhouse Rock” know that laws only result from Congress and the president cooperating.

“Schoolhouse Rock — they never told you not to negotiate,” McCarthy said. “They told you to work together.”

The speaker has said an agreement depends on a commitment to limit the debt, which already totals more than $31.4 trillion. But both Biden and McCarthy have pledged to protect Social Security and Medicare, which will be the primary drivers of the debt in the coming decades, according to economists and the non-partisan Congressional Budget Office.

McCarthy said he looked forward to Biden “changing his mind and negotiating with us.”

Senate Democrats are working to help bolster Biden’s case. In a letter to colleagues Monday, Senate Majority Leader Chuck Schumer, D-N.Y., said that committees would hold hearings this week “to expose the true impact” of the House GOP’s “reckless” bill.

“If Speaker McCarthy was a serious good-faith negotiator, he would not have let extremists take him hostage and move this debate in the wrong direction,” Schumer wrote.