House Speaker Kevin McCarthy called on President Joe Biden and congressional Democrats to join Republicans in cutting federal spending and reducing the nation’s debt as part of negotiations to raise the debt limit.
Ahead of Biden’s State of the Union address on Tuesday night, McCarthy (R, Calif.) said in a brief speech on Monday that “Our national debt is high, too high, and the problem is getting worse, not better.”
The government reached its debt limit of $31.4 trillion in January and needs to raise it by early June to avoid a default. McCarthy and other Republicans want to tie spending cuts to raising the limit, while Democrats want to raise it without any conditions attached.
“Mr. President, it’s time to get to work,” McCarthy said on Monday, adding that lawmakers “must commit to finding common ground on a responsible debt-limit increase.”
Biden is expected to stick to his message during his State of the Union: that he won’t negotiate. Democrats have said that the current deficit was built up under both Republican and Democratic administrations, and that former President Donald Trump’s 2017 tax cuts added to the deficit, while Biden’s legislative programs have reduced the deficit.
Last week, McCarthy expressed optimism about finding common ground with Biden after the two met at the White House, but he wouldn’t talk about what spending cuts he is offering in exchange for raising the borrowing limit.
He did reiterate on Monday something he has said before. “Cuts to Medicare and Social Security, they’re off the table.”
McCarthy’s speech indicated the political standoff over the issue is likely to continue into the spring. He noted that as a senator, Biden previously voted against raising the debt ceiling and said that negotiating is a part of governing.
The White House previously has said that McCarthy himself voted three times to lift the debt ceiling under Trump’s administration without any spending cuts.
Treasury Secretary Janet Yellen told ABC News earlier on Monday that the U.S. government risks “economic and financial catastrophe” if the House does not raise the debt limit. “Every responsible member of Congress must agree to raise the debt ceiling,” Yellen told Good Morning America. “It’s something that simply can’t be negotiable.”
Biden’s State of the Union starts at 9 p.m. Eastern time on Tuesday. He is expected to call for quadrupling the tax on corporate stock buybacks, according to the White House. The Inflation Reduction Act, which Biden signed into law in August, imposed a 1% tax on buybacks. He also plans to call for a billionaire minimum tax, according to a White House press release.
“He looks forward to speaking with Republicans, Democrats, and the country about how we can work together to continue building an economy that works from the bottom up and the middle out, keep boosting our competitiveness in the world, keep the American people safe, and bring the country together,” the White House said.
Write to Janet H. Cho at janet.cho@dowjones.com
Credit: marketwatch.com