Speaker Kevin McCarthy previewed Monday what he hopes House Republicans may pass in the coming weeks to raise the debt ceiling during a speech on the New York Stock Exchange.
“So here is our plan: In the coming weeks, the House will vote on a bill to raise the debt ceiling through next year, save taxpayers trillions of dollars, make us less dependent on China, curb our inflation, all without touching social networks. security and Medicare,” he told a crowd of traders and analysts on the sixth floor of the exchange.
The plan outlined in the speech will serve as a marker for the GOP’s demands amid an impasse between the two parties over how to resolve the issue. There is no bipartisan deal in sight and Democrats continue to argue that the debt limit should be lifted without conditions. The Republican bill is not expected to pass the Senate.
The GOP plan for a one-year debt limit increase, McCarthy said, would push domestic non-defense spending back to 2022 levels. McCarthy said they would try to pass the Republican plan in the coming weeks.
In a golden ballroom, McCarthy He touted the GOP proposal to a crowd working at the exchange and nearby businesses, saying, “Simply put, it sets us on a fiscally responsible path in three ways: limit, save and grow.”
Those assurances came as small groups of protesters stood outside the stock exchange, accusing McCarthy of seeking to cut funding for Medicare.
Meanwhile, McCarthy has repeatedly criticized President Joe Biden for what he characterized as his unwillingness to negotiate.
“Without exaggeration, the US debt is a time bomb that will go off unless we take serious and responsible action. However, how has President Biden reacted to this problem? He hasn’t done anything. So in my opinion, and I think the rest of the United States, it is irresponsible,” he said.
The White House criticized McCarthy on Monday over the demands of the Republican Party. White House deputy press secretary Andrew Bates said in a statement that McCarthy is “engaging in a dangerous economic hostage-taking.” Bates said McCarthy “did not clearly describe what House Republicans are proposing and will vote on,” arguing that McCarthy was only “referencing a vague and extreme MAGA wish list.”
But White House officials will be watching closely whether McCarthy can deliver on the next steps he laid out: passing a bill in the coming weeks that will raise the debt ceiling and cut spending. If he can do that, Biden would be open to meeting with McCarthy again, a senior White House official said.
While it sounds optimistic, getting to 218 votes is a huge hurdle for Chairman McCarthy and he can only afford to lose four votes.
“I know there is a place where we can come to an agreement,” McCarthy said. “It’s just hard when people think there’s not $1 that can be cut from public spending today.”
While McCarthy did not specify where Republicans plan to cut spending, he expressed a desire to tie a sweeping GOP energy package, known as HR-1, to the debt ceiling debate. The plan, which passed the House last month, seeks to boost American energy production and grow the economy by undoing nearly all of President Joe Biden’s climate policy. He is expected to be dead by his arrival in the Senate.
McCarthy used quotes from former Vice President Biden when dealing with the debt crisis in 2011. “He said ‘you can’t govern without bargaining.’ Well, what changed, Mr. President? I agree with the former sensible Joe Biden. He knew that our government is designed to find a compromise. I just wish the current extreme Joe Biden would listen to the former Joe Biden.”
The line drew a round of applause from the audience, the only one that occurred during the otherwise subdued speech.
The administration reiterated its position this morning in a statement from White House Assistant Press Secretary Andrew Bates, saying that “there is a responsible solution to the debt limit: address it immediately, without risking or taking hostages, as the US government did.” Republicans three times in the last administration and as Presidents Trump and Reagan advocated in office,” noting a quote from former President Donald Trump.
Chairman McCarthy said he had not met with Biden since early February.
Through his speech, McCarthy urged Wall Street to pressure the Biden administration to agree to spending cuts. “If you agree, don’t sit around, join us,” he said.
He also said he was not monitoring stock market conditions as he headed into debt ceiling negotiations. “The markets are reacting to the work we’ve done, so you shouldn’t be monitoring them,” he said, addressing traders directly. “It should monitor what we’re doing, and that’s exactly what I do.”
The reason markets are currently rising, he said, “is because the president has ignored us for 75 days.” He did not clarify why that would drive shares higher. Markets were trading slightly lower on Monday.
McCarthy ended his speech by invoking the protracted battle for oratory. “I will never give up. I will never give up on you, we will not rest until the economy is healthy.”
He spoke for almost 30 minutes and received another round of applause at the end of his teleprompter speech.
During a brief discussion that followed the speech, John Tuttle, NYSE vice president, asked McCarthy about the Federal Reserve’s economically painful regime of rate hikes aimed at combating sticky inflation.
“Let me first say that the Federal Reserve is an independent entity,” McCarthy said, drawing a clear distinction between his views and those of former President Donald Trump. Trump repeatedly tried to attack the credibility of the Fed while he served as president.
Still, McCarthy was not without his critics. If “as an independent entity they had acted sooner” and raised interest rates to 3%, he said, “then we wouldn’t be in this situation.” Interest rates are currently located in a range of 4.75% and 5% and inflation, measured by the Consumer Price Index, is around 5% per year.
The Speaker of the House criticized the Fed’s decision to keep interest rates close to zero for most of the last decade, creating “easy money” for Wall Street. “We also realized what we were doing,” he said.
Federal spending, McCarthy said, was a key driver of inflation and his role as policymaker “is to cut spending that created inflation to begin with.”
While pandemic-era government stimulus spending likely added to soaring inflation rates, a host of other factors also contributed to higher prices. These include Russia’s war in the Ukraine, which sent up food and energy prices; and pandemic-era supply chain disruptions, which caused shortages of key materials that shut down critical parts of the economy, such as the auto industry.
Earlier this month, European leaders including French President Emmanuel Macron and European Commission head Ursula von der Leyen traveled to Beijing hoping to boost peace in Ukraine but also balance trade ties.
Last week, Brazilian President Luiz Inacio Lula da Silva also met with Chinese leaders. He told a news conference from Beijing that the United States should stop “encouraging” the war in Ukraine. He also revealed that during his talks with Chinese leader Xi Jinping they discussed forming a group of like-minded leaders on Ukraine.
“I have a theory that I have already defended with Macron, with Olaf Scholz from Germany and with Biden, and yesterday we discussed at length with Xi Jinping. It is necessary to constitute a group of countries willing to find the way to make peace”, said Lula.
The United States and the European Union have been major suppliers of arms and aid to Ukraine after the Russian invasion.
McCarthy expressed concern about these developments on Monday, but said the Republican debt ceiling plan could solve some of those problems.
“We all know that in this nation it is difficult to build anything, it is difficult to work with the government,” he said. “People will flow to other countries that make it easier, that make it more welcoming to capital.” Elected officials should sit down and use these debt ceiling negotiations to reduce red tape and trade regulations, he said. “You can use the debt ceiling as an opportunity to do that,” he added.
“The other fear that we should all have is the grouping and growth of China, Russia, North Korea and Iran,” McCarthy said. “We must not ignore that.”
The move away from the dollar as a reserve currency is also cause for concern, he said.
“The only way the dollar doesn’t become the reserve currency is not based on what China or other countries do,” McCarthy said. “It’s what we do from the inside. And spending too much money, borrowing $31 billion, is a bigger threat than Brazil using the yuan instead of the dollar.”
—Additional reporting by Jeremy Diamond, Arlette Saenz, Alicia Wallace, Simone McCarthy, Michelle Toh, and Duarte Mendonca.