Washington, United States - President Joe Biden and the new Republican speaker of the House of Representatives, Kevin McCarthy, face off on Wednesday at the White House to discuss the US debt stand-off.
So far apart, they can't even agree on how to describe their get-together. At stake is the stability of the US economy.
Republicans are threatening to block the usually rubber stamp approval for raising the nation’s credit limit if Democrats don’t first agree to steep future budget cuts. The White House, meanwhile, accuses the Republicans of taking the economy “hostage” in order to exact politically motivated budget concessions.
Fail to raise the debt ceiling by around June, the Treasury says, and the US will be forced into default on its $31.4 trillion (R545 trillion) debt – a historic first that would leave the government unable to pay bills, undermine the US economy’s reputation, and probably panic investors.
McCarthy said in a tweet on Tuesday that he was going “to negotiate for the American people”.
Biden, though, doesn’t even want to hear the word “negotiation” when it comes to the debt ceiling.
“The president firmly believes there should be no negotiation over this,” Biden’s national security spokesperson John Kirby said on Tuesday.
There have been other showdowns over the years when Republicans baulked at allowing US debt to spiral ever higher. But, on most occasions, the dispute was quickly smoothed over, Congress extended the ceiling and the economy kept going without a hiccup.
This time, the political heat is so high that things could be different.
Two years through his first term, Biden is widely expected to be on the cusp of announcing his bid for a second term in the 2024 election. And Republicans, who have just taken over control of the House, are eager to show their muscle.
Even if McCarthy is minded to show flexibility, his power in Congress depends almost entirely on the desires of a far-right group of Republicans who are more likely to play chicken, regardless of the global financial consequences.
The White House says it won’t allow the debt ceiling to be part of any negotiation on future government spending because the $31.4 trillion is money agreed to by Congress. In other words, refusal to raise the debt ceiling would be like refusing to pay a credit card bill.
There could be room for negotiating on changes to future budgets.
McCarthy says his goal is to tackle “runaway spending”.
But when it gets down to brass tacks, it’s hard for either party to say where they can find significant reductions, unless they go into the usually politically untouchable Social Security, Medicare, Medicaid or other government subsidised health care.
Biden is signalling he wants to call McCarthy’s bluff by insisting that the Republicans lay out where exactly they’d make cuts.
In a memo on Tuesday, Brian Deese, the director of the National Economic Council, and Shalanda Young, the director of the Office of Management and Budget, challenged McCarthy to publish a draft budget. The White House will issue its own on March 9, they said.
That’s “so the American people can see how House Republicans plan to reduce the deficit”, the two senior Biden aides said.
McCarthy insisted before the meeting that he was “not interested in political games”.
But in comments to supporters on Tuesday, Biden described McCarthy as a “decent man” who had become beholden to his far right, after an embarrassingly prolonged fight for enough votes to win the House speakership.
“He had to make commitments that are just absolutely off the wall for a speaker of the House to make in terms of being able to become the leader,” Biden said.
AFP