In a high-stakes meeting about the debt limit on Wednesday, President Joe Biden is expected to press House Speaker Kevin McCarthy on two key matters: Outlining what spending cuts he and his GOP conference are looking for in exchange for increasing the country’s borrowing power, and getting his commitment to avoid a first-ever default on the nation’s debt.
The White House outlined the two key questions in a memo released Tuesday by Office of Management and Budget Director Shalanda Young and National Economic Council Brian Deese. The memo is the latest in the standoff between the White House and House Republicans over the country’s borrowing limit after the U.S. reached the $31.4 trillion debt ceiling earlier this month.
The Treasury Department has begun using “extraordinary measures” to fund operations and allow the country to continue paying its debts, which are expected to run out in June.
Republicans want to tie a debt ceiling increase to spending cuts, saying that they would only raise the limit to secure an overhaul in federal spending. They have not yet specified what cuts they’re looking for.
Democrats, on the other hand, want a clean debt ceiling increase, arguing that Congress has voted to raise the borrowing limit numerous times under presidents of both parties, including three times under Biden’s predecessor, Donald Trump. They’ve also warned that not raising the debt ceiling would have a devastating impact on the global economy.
“As the President has said many times, the United States must never default on its financial obligations,” the memo from Deese and Young reads. “Raising the debt ceiling is not a negotiation; it is an obligation of this country and its leaders to avoid economic chaos.”
“In Wednesday’s meeting, President Biden will seek a clear commitment from Speaker McCarthy that default … is unacceptable,” they continued. “President Biden will ask Speaker McCarthy to publicly assure the American people and the rest of the world that the United States will, as always, honor all of its financial obligations.”
Or, as Biden put it on Monday, when asked for his message to McCarthy: “Show me your budget, I’ll show you mine.”
In an interview with CBS News on Sunday, McCarthy did not specify what cuts his conference is seeking, but rather sought to slam Democrats and the president for reckless spending.
“I want to find a reasonable and a responsible way that we can lift the debt ceiling, but take control of this runaway spending,” the California Republican told CBS’ “Face the Nation” on Sunday, adding: “I don’t think there’s anyone in America who doesn’t agree that there’s some wasteful Washington spending that we can eliminate.”
The White House fired back, writing in Tuesday’s memo that “any serious conversation about economic and fiscal policy needs to start with a clear understanding of the participants’ goals and proposals.”
“Speaker McCarthy and his Caucus need to transparently lay out to the American people their fiscal and economic proposals in the normal budget process,” Young and Deese wrote, adding: “On Wednesday, President Biden will seek clarity from Speaker McCarthy about when the public can expect to see his detailed, comprehensive budget.”
The memo from the two economic advisers also presented data on how much House Republicans’ proposals – including repealing portions of the Inflation Reduction Act, extending the Trump-era 2017 tax cuts and the imposition of a 30% national sales tax – would increase the national deficit.
They also noted that Biden will release his budget on March 9, which will aim to demonstrate how the president “plans to invest in America, continue to lower costs for families, protect and strengthen Social Security and Medicare, and reduce the deficit – with tables and numbers showing exactly how his economic and fiscal policies add up to achieve these goals.”