Lawmakers exchanged sharp criticism about who was to blame for the protracted standoff over the debt ceiling on Wednesday.
As the country nears its deadline to avoid a federal default, talks between Joe Biden and the House speaker, Kevin McCarthy, continued on Wednesday, as negotiators met again to hash out the details of a potential deal. But both parties simultaneously traded pointed remarks, underscoring that an agreement is not yet in reach.
Congresswoman Pramila Jayapal, chair of the Congressional Progressive Caucus, pushed back against Republicans’ insistence on spending cuts. Jayapal said she spoke on Tuesday to White House officials who informed her that Republican negotiators had already rejected $3tn worth of deficit-reduction proposals, such as ending tax subsidies for large oil companies and closing the carried-interest loophole.
“It is not actually about debt or deficit,” Jayapal said at a press conference on Wednesday afternoon. “It is about keeping the cash flowing to the wealthiest Americans and biggest corporations.”
Accusing Biden of acquiescing to the “extreme” wing of his party, McCarthy reiterated that he would not support a “clean” bill raising the debt ceiling without cutting government spending. Rejecting the White House’s efforts to reduce the federal deficit by raising more tax revenue, McCarthy insisted that any agreement must focus on the spending side.
“We have to spend less than we spent last year,” McCarthy said. “It’s not a revenue problem. It’s a spending problem.”
Asked what concessions McCarthy was willing to offer Democrats to win their support on a potential bipartisan bill raising the debt ceiling, the speaker sidestepped the question.
“I’m willing to make America stronger, to curb inflation, less dependency on China and spend less than we spent the year before,” McCarthy replied. “It’s not my responsibility to represent the socialist wing of the Democratic party.”
Progressive lawmakers countered that Republicans were playing politics with the future of the US economy in the hopes of weakening Biden’s prospects in the 2024 election.
“They are not negotiating,” said the progressive congresswoman Ilhan Omar of Minnesota. “They are looking to waste time, play games and make sure we default because they think that somehow that is going to be a political advantage that they will have in the coming elections.”
The clashing perspectives demonstrated the challenges ahead in getting a debt ceiling bill through Congress. With some of the far-right members of the House Republican conference indicating they will not accept any compromise on the debt ceiling, McCarthy will probably need some Democratic votes to pass a bipartisan bill, and that task appeared daunting on Wednesday.
“Democrats are not going to vote for a bill that screws poor people while protecting rich people and paving the way for another tax cut for billionaires,” said congressman Jim McGovern of Massachusetts, the top Democrat on the House rules committee.
The White House, however, voiced optimism that a deal could still be struck, saying the talks remained “productive”.
“If it keeps going in good faith, then we can get to an agreement here that is bipartisan and that will get out of the House and get out of the Senate,” said Karine Jean-Pierre, the White House press secretary.
The clock is ticking for lawmakers to reach a solution and prevent a default that could reap devastating consequences on the American economy and global markets. The treasury secretary, Janet Yellen, reiterated in a letter sent to congressional leaders on Monday that the US government may be unable to pay its bills as early as 1 June.
With just a week left before a potential default, surveys offer a mixed picture on the public’s response to the debt ceiling negotiations. According to a CNN poll, 60% of Americans believe the debt ceiling should only be raised if Congress simultaneously approves government spending cuts, while 24% want the borrowing limit to be hiked no matter what. But another NPR/PBS NewsHour/Marist survey showed 52% of Americans support Congress raising the debt ceiling and holding a separate discussion on potential spending cuts.
For most Americans, the debt ceiling fight remains a distinctly Washington issue. The CNN survey found that 71% of Americans believe failure to address the debt ceiling would cause a crisis or major problems for the country, but only 35% said a default would damage their own finances.
And yet, economists have warned that the ramifications of a federal default would be felt in every US household. Millions of jobs could be lost, and interest rates would probably climb, while those who rely on government funding would be deeply affected. A default would also probably trigger a severe tumble in the US stock market, reducing the value of tens of millions of Americans’ retirement accounts.
Speaking at a Wall Street Journal forum on Wednesday, Yellen noted that markets are already seeing some volatility as the debt ceiling talks drag on, and she warned that the Biden administration will face “very tough choices” if the debt ceiling is not raised.
“There will be some obligations we will be unable to pay,” Yellen said. She added, “We simply have to raise the debt ceiling.”