WASHINGTON — The highest Democrat within the House slammed Republicans’ plan to pass a bill later this month to suspend the debt ceiling for a 12 months and impose broad federal spending cuts, reasonably than simply raise the $31.4 trillion limit and avoid any risk of potential U.S. debt default.
“Even the flirtation with the default goes to harm on a regular basis Americans,” House Minority Leader Hakeem Jeffries told CNBC’s “Squawk Box” on Tuesday.
“It risks raising automobile payments, it risks raising home mortgage payments, it risks raising student loan debt payments,” he said. “It’s going to hurt on a regular basis Americans and crash our economy at a really fragile time, particularly within the immediate aftermath of the regional banking crisis.”
The Recent York Democrat said refusing to lift the debt ceiling for the primary time in history would have “catastrophic” consequences.
Jeffries said Democrats are open to negotiations on federal spending, but that “it ought to be done through a budget process and thru the appropriations process, not in a hostage-taking situation.”
“The suitable thing to do is for us to ensure that we protect the total faith and credit of the US of America, particularly during a fragile time in our economy,” said Jeffries.
Securities and Exchange Commission Chairman Gary Gensler echoed Jeffries’ concerns Tuesday, telling lawmakers that the debt ceiling fight has already affected the markets.
“There’s certain money market funds and other funds which are being careful about which short-term Treasury bills they buy,” Gensler, who was appointed by President Joe Biden, told the House Financial Services Committee. “It is probably going that we’d begin to see … less liquidity within the Treasury markets, which ultimately means higher costs to the taxpayers coming into that.”
Defaulting on the nation’s debt would cause “one heck of a large number” in capital markets that will ripple into the banking system, he said.
On Monday, House Speaker Kevin McCarthy, R-Calif., said his latest debt ceiling proposal will “save taxpayers trillions of dollars, make us less dependent upon China, curb our high inflation — all without touching Social Security and Medicare.”
The McCarthy plan features a cap on non-defense discretionary spending, a “clawback” of unspent pandemic relief funds and latest work requirements for Medicare recipients of a certain age.
The House Speaker told CNBC on Monday that he could “get the party behind it,” effectively admitting that his plan didn’t have the support of enough members of his caucus to pass in its current form.
A detailed McCarthy ally expressed confidence Tuesday that the party could pass McCarthy’s bill, despite disagreements over key pieces of it.
“The deal within the Home is you could have to have the option to count to 218 votes, and if you could have 218 votes then you definately can [pass a bill],” Rep. Patrick McHenry, R-N.C., said on CNBC’s “Squawk Box” Tuesday.
“I do not think it should be that much drama for us to pass this debt ceiling increase and spending cuts with it. Republicans are unified around this within the House,” said McHenry.
But signs were already emerging Tuesday that Republicans may not have the 218 votes they need, no matter what they put within the bill to try to win over conservatives.
Biden has demanded that Republicans present their very own spending budget as a start line in negotiations, something McCarthy has yet to do.
A GOP budget would likely contain spending cuts which are unpopular with voters, and Jeffries took aim at a few of these on Tuesday.
“We actually shouldn’t entertain cuts to social security and Medicare and Medicaid and veterans advantages and things of this nature that a few of the extreme MAGA Republicans within the House majority would love to do,” he said.
