McCarthy promises Wall Street House Republicans won’t vote for a stand-alone debt limit bill

U.S. House Speaker Kevin McCarthy traveled to the New York Stock Exchange on Monday to press for the Republican approach to raising the nation’s debt limit, calling on Democrats to agree to future spending cuts.

McCarthy repeatedly criticized President Joe Biden and blamed him for a standoff over the debt limit that’s lasted for months.

McCarthy has argued for months that any increase to the debt limit, which allows the federal government to pay for spending Congress has already approved, should be tied to future spending cuts, and during the speech said Republicans would never agree to a stand-alone debt limit bill.

Biden and Democrats have repeatedly said Congress should raise the debt limit in a stand-alone bill. They maintain that discussions about changes to tax and spending policy should take place separately within the annual budget and appropriations process.

McCarthy and Biden met to discuss the debt limit on Feb 1, but haven’t had in-person negotiations since then.

Biden has repeatedly called on U.S. House Republicans to release a budget resolution for the upcoming fiscal year, saying once that’s out the two sides can compare Biden’s budget request to what the GOP wants to do.

House Republicans have not yet released their fiscal 2024 budget resolution and haven’t released a timeline for when they would.

A spokesperson for House Democratic Leader Hakeem Jeffries said in a statement following McCarthy’s speech that it doesn’t represent a plan.

“Extreme MAGA Republicans continue to treat the full faith and credit of the United States as a hostage situation while their so-called budget proposal remains in the witness protection program,” Christie Stephenson said.

“As always, we will evaluate any legislative text when and if House Republicans can ever agree with themselves about how much they want to devastate American families in order to finance tax cuts for the wealthy, well-off and well-connected,” Stephenson added.

The GOP debt limit legislation, which McCarthy outlined Monday without citing specifics, would:

• Reduce federal spending to the previous fiscal year’s spending levels.
• Cap increases in federal spending to 1% annually during the next decade.
• “Claw back” billions of dollars of “COVID-related” federal funding.
• Set “work requirements that ensure able-bodied adults without dependents earn a paycheck and learn new skills.” While McCarthy did not name programs, Republicans have advocated work requirements in the Supplemental Nutrition Assistance Program for low-income people, previously known as food stamps.

The U.S. House will vote on the GOP proposal that would raise the debt ceiling into next year in the “coming weeks,” McCarthy said.

Any debt limit increase will need bipartisan support to move through the Democratically controlled U.S. Senate and become law.

If Congress fails to raise the debt limit to pay for spending it has already authorized, sometime this summer the country would default on its debt for the first time in history.

That would limit the Treasury Department to only paying for bills with the cash the federal government has on hand at the time. The full extent of the impact is unclear, but it’s likely payments for Social Security, Medicare, Medicaid, federal employee salaries, and hundreds of other federal programs would be delayed.

The stock market and global economy would likely enter a downturn, possibly pushing the United States and other countries into a recession.

Mark Zandi, chief economist at Moody’s Analytics, suggested to Congress in March that a first-ever default on the debt would be pernicious.

“It would be a significant hit to the wealth of all Americans and then ultimately we’d start losing jobs, unemployment would start to rise, we’d be in a very, very severe recession,” Zandi said.