OAN Brooke Mallory
UPDATED 6:21 PM – Tuesday, March 28, 2023
As the United States gets closer to the possibility of its first-ever default, Republican House Speaker Kevin McCarthy stated on Tuesday that there has been “no progress” in the debt ceiling talks between House Republicans and the Biden administration.
“I’m always an optimist. I’m not now,” McCarthy (R-Calif.) told the press.
To pay for obligations, Congress must occasionally raise the debt ceiling, which is the maximum sum that can be borrowed by the federal government. The deficit occurs when the government spends more than it receives in tax revenue.
House Republicans have refused to raise the debt ceiling in the absence of commitments to decrease expenditure.
“Time is ticking… Now I’m very concerned about where we are,” McCarthy said in the interview.
The United States has already exceeded its debt ceiling, necessitating the Treasury’s use of “extraordinary measures” to continue making payments.
If lawmakers don’t raise or suspend the limit, the administration would likely use up all of its emergency measures this summer, according to the nonpartisan Congressional Budget Office.
The White House has adopted the stance that, while expenditure reductions are necessary, it will not engage in debt ceiling negotiations and anticipates Republican action to raise the ceiling.
According to Democrat-opinion, Republicans only bring up the borrowing cap when a Democrat president is in office. They claim that Republicans have raised the debt ceiling while enabling new spending and tax breaks for the wealthiest, under previous President Donald Trump.
Since McCarthy and Biden’s original meeting to discuss debt ceiling measures, almost two months have passed without any improvement or plan.
McCarthy termed the non-negotiation attitude “extreme” in a letter he sent to Biden on Tuesday morning, stating that action is required.
McCarthy maintained that he is ready to continue the conversation and finally come to a consensus.
“It’s time to drop the partisanship, roll up our sleeves, and find common ground on this urgent challenge,” McCarthy said, urging the White House to contact his team as soon as possible.
Republicans’ desired spending cuts are still somewhat ambiguous and the GOP rejected claims that they would try to slash funds for Social Security and Medicare.
On Tuesday, McCarthy suggested in his letter that non-defense expenditure should be cut to “pre-inflationary levels,” so that leftover money for COVID-19 treatment can be reclaimed.
He also said that the job requirements for entitlement recipients, without dependents, should be tightened.
In order to reduce the deficit by $3 trillion over the following ten years, Biden’s budget, which was presented earlier this month, called for a minimum tax of 25% on the wealthiest Americans.
House Republicans have also been urged by President Biden to present a budget from their end and start discussions on spending cutbacks from there. However, no budgets have been presented so far.
“It’s time for Republicans to stop playing games, agree to pass a clean debt ceiling bill, and quit threatening to wreak havoc on our economy… And if they want to have a conversation about our nation’s economic and fiscal future, it’s time for them to put out a budget,” said Karine Jean-Pierre, press secretary to the White House.
The consequences of not raising the debt ceiling would be disastrous for the American economy. Failure to do so would disrupt market activity and the economy more broadly, as well as cease everyday operations inside the federal government.
According to a Moody’s Analytics summary from last year, a Treasury bond default might send the American economy into a tailspin as severe as the Great Recession that started in late 2007 and lasted until 2009.
If the United States went into default, the gross domestic product (GDP) would decline by 4% and 6 million people would most likely lose their employment.