Washington — House Speaker Kevin McCarthy said Wednesday that House Republicans and the White House remain “far apart” on reaching consensus on a plan to address the debt ceiling as the threat of a historic default on the nation’s debt grows.
McCarthy told reporters on Capitol Hill that the GOP negotiators, Reps. Patrick McHenry and Garret Graves, are resuming talks with Biden administration officials on the White House campus in hopes of brokering a deal to avert a default on the country’s $31.4 trillion debt.
But the speaker warned “there’s a number of places that we are still far apart” and said “it didn’t seem like it’d be this hard” to reach an agreement. McCarthy reiterated the GOP’s demands to slash federal spending rather than freeze it at current levels, and again vowed not to bring a clean bill solely addressing the debt limit to the House floor, as the White House and Democrats have been pushing for.
“You have to spend less than you spent last year. That’s not that difficult to do, but in Washington, somehow that is a problem,” he said, adding he believes White House and Republican negotiators “can make progress” during their meeting Wednesday.
On Wednesday evening, McCarthy said that though there is not yet a deal, there were some issues “I think we’ve made some progress forward on.” He told reporters that if a deal is struck while lawmakers are away over Memorial Day weekend, “we would want members to come back.” The speaker said he planned to remain in Washington this weekend.
He also said that while there are different “X-dates” being floated, he is operating under the assumption that the date Treasury Secretary Janet Yellen has mentioned, possibly June 1, is the one “I’ve agreed to.”
White House press secretary Karine Jean-Pierre said the administration’s negotiators will continue to engage in “good faith” with their GOP counterparts to reach a bipartisan budget agreement, but she pushed back on Republicans’ characterization of the ongoing logjam. A default on the debt, she said, would result in millions of job losses, and harm Americans’ retirement accounts.
“This is a manufactured crisis, plain and simple,” she said. “That’s what we’re seeing currently, that’s what we’ve been dealing with for the past couple of weeks, a manufactured crisis.”
Jean-Pierre said the House GOP’s spending demands would result in cuts to education, meals for the elderly, veterans’ housing, law enforcement, air and rail safety, and opioid treatment.
McCarthy has been adamant that the White House and Democrats are to blame for the political standoff, and he accused President Biden of brushing off calls to engage in negotiations for weeks after an initial meeting in February. The two most recently met one-on-one Monday, while their top negotiators have continued working to hammer out a deal.
Democrats, the speaker claimed, have grown “so extreme, so far to the socialist wing” that they oppose work requirements for recipients of food stamps, cash assistance and Medicaid, as well as reigning in federal spending.
The speaker also said that Democrats had an opportunity to address the debt limit while they controlled both chambers during the last Congress, but chose not to.
“They could have lifted the debt ceiling prior to me becoming speaker,” he said. “They knew the outcome of the election already, they knew we were taking power. They passed an omnibus bill but they decided not to do the rising of the debt ceiling.”
The U.S. is staring down a June 1 deadline to raise or suspend the debt ceiling. The nation reached the legal limit on its borrowing authority in January, forcing the Treasury Department to begin employing “extraordinary measures” to continue paying its bills.
But the current standstill between the White House and House Republicans is ratcheting up fears of a first-ever default, which Treasury Secretary Janet Yellen has warned will be catastrophic for the U.S. economy.
Yellen said Wednesday that it appears likely the U.S. will not be able to pay all of its bills come early June absent congressional action, echoing warnings she has made to lawmakers.
“It seems almost certain that we will not be able to get past early June,” she said during a virtual appearance to The Wall Street Journal’s CEO Council Summit in London.
But the Treasury secretary said the Biden administration’s attention is on addressing the debt ceiling and avoiding a default.
“We are committed to not having missed payments and raising the debt ceiling so that’s not a situation we face,” Yellen said. “We’re not involved in planning for what happens if there’s a default.”
Graves and McHenry, the chief Republican negotiators, indicated to reporters before departing for the White House that they understand the stakes continue to rise as each day passes without an agreed-upon plan to raise the debt ceiling.
“There’s no question that we’re getting to crunch time,” Graves, of Louisiana, said, while McHenry, of North Carolina, acknowledged, “We are in my view way past what is a responsible deadline.”
McCarthy said he does not believe there will be a default, saying, “I firmly believe we will get and solve this problem.” But Yellen told the speaker in a letter Monday that waiting until the “last minute” to address the debt limit can cause “serious harms to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact” the nation’s credit rating.
Yellen added that the Treasury has already seen borrowing costs increase significantly for securities maturing in early June.