McCarthy and White House at odds over plan to raise national debt ceiling

According to the Associated Press, House Speaker Kevin McCarthy pledged Monday to pass legislation to raise the nation’s debt ceiling — but only on condition of capping future federal spending increases at 1% — criticizing President Joe Biden for refusing to engage in budget-cutting negotiations to prevent a debt crisis.

McCarthy’s Wall Street address came with Washington heading toward a potential fiscal crisis over the need to raise the nation’s debt limit, now at $31 trillion, and avert a federal default. Federal spending skyrocketed during the COVID-19 crisis, rising to $7.4 trillion in 2021, before sliding back to $6.2 trillion in fiscal year 2022, according to Treasury Department data. The nation runs more than $1 trillion in annual deficits, and the last time the federal budget was balanced was 2001.

The plan McCarthy outlined would raise the nation’s debt limit into next year, coupling it with a plan to roll back federal spending to 2022 levels, recoup unspent COVID-19 funds, and cap future spending at no more than 1% per year over the next decade. Republicans, he said, also want to attach policy priorities, including imposing work requirements to recipients of government aid and add on H.R. 1, an expansive energy bill that would favor oil, gas, and coal production. He pledged not to touch the Medicare and Social Security programs important to older Americans that other Republicans want to cut.

The White House and Democrats in Congress have been unwilling to engage in talks with the Republicans, saying Congress must simply raise the debt limit without conditions.

McCarthy is expected to brief House Republicans privately this morning on the details. Even though the Republican plan’s chances in the Democratic-controlled Senate are dismal, House approval could serve as a calling card pressuring Biden to negotiate.