House Speaker Kevin McCarthy said Tuesday that there was “no progress” in debt ceiling negotiations between House Republicans and the White House, because the U.S. inches closer to risking a first-ever default.
“We have made no progress,” the California Republican told CNBC’s “Squawk Box.” “I’m at all times an optimist. I’m not now.”
Congress periodically must lift the debt limit, the utmost amount the federal government is allowed to borrow, to cover spending obligations. The federal government often spends extra money than it takes in from taxes, leading to the deficit. House Republicans have refused to lift the debt ceiling without guarantees of spending cuts.
“Time is ticking,” McCarthy said within the interview. “Now I’m very concerned about where we’re.”
The U.S. already hit its debt limit, forcing the Treasury to take so-called extraordinary measures to maintain paying its bills. The nonpartisan Congressional Budget Office estimated the administration will exhaust its emergency tools sometime this summer, raising the prospect of a default unless lawmakers raise or suspend the ceiling.
The White House has taken the position that while spending cuts must be made, it’ll not negotiate on the debt ceiling, and expects Republicans to lift the limit. Democrats argue that the GOP has only made the borrowing limit a difficulty when a Democratic president is in power. They point to the multiple times Republicans authorized debt ceiling increases under former President Donald Trump while authorizing latest spending and tax cuts for the wealthiest Americans.
It has been nearly two months since McCarthy and Biden met to debate debt ceiling measures. McCarthy, in a letter to Biden on Tuesday morning, said motion is required and called the non-negotiation position “extreme.” McCarthy said he is ready to proceed discussions.
“It is time to drop the partisanship, roll up our sleeves, and find common ground on this urgent challenge,” McCarthy wrote, asking the White House to succeed in out to his team by the tip of the week.
The spending cuts Republicans want remain murky. Republicans balked at allegations they’re searching for to chop funding to programs similar to Social Security and Medicare, leaving little else to regulate. In his letter Tuesday, McCarthy proposed reducing nondefense spending to “pre-inflationary levels,” reclaiming unspent coronavirus relief funds and strengthening entitlement work requirements for people without dependents.
Biden released his budget earlier this month, which called for a 25% minimum tax on the richest Americans, amongst other levies, to chop the deficit by $3 trillion over the following decade. The president has asked House Republicans to release a budget as well, and negotiate spending cuts from there, but they’ve yet to achieve this.
“It is time for Republicans to stop playing games, comply with … pass a clean debt ceiling bill, and quit threatening to wreak havoc on our economy,” White House press secretary Karine Jean-Pierre said in response to McCarthy on Tuesday. “And in the event that they need to have a conversation about our nation’s economic and financial future, it is time for them to place out a budget.”
Not lifting the debt ceiling would have catastrophic effects on the U.S. economy. Failure to achieve this would halt day by day operations throughout the federal government and potentially roil markets and the broader economy.Â
A Moody’s Analytics report last yr found a default on Treasury bonds could throw the U.S. economy right into a tailspin as bad because the Great Recession. If the U.S. were to default, gross domestic product would drop 4% and 6 million employees would lose their jobs, based on the Moody’s estimate.
