Biden-McCarthy escalate tit-for-tat over debt ceiling deal

A tit-for-tat battle between President Biden and Speaker McCarthy (R-Calif.) over the nation’s finances is escalating this week with the White House blasting the Speaker as he turned to Wall Street Monday to pitch his debt ceiling plan.

With Congress returning from a two-week recess, the talks are reaching a crucial stretch in nearing a deal to avoid a default. But so far, each side has taken their respective corners on the matter, with little indication anyone is willing to budge just yet.

Biden is holding his ground on wanting a clean debt ceiling increase this year — without provisions. And, while McCarthy is still working to unite his fractured conference, the Speaker laid out proposals Monday that the White House and Democrats almost immediately panned.

Both sides have also not yet determined when to resume talking.

President Biden and Speaker Kevin McCarthy (R-Calif.) leave the Friends of Ireland Luncheon at the U.S. Capitol in Washington, D.C., on Friday, March 17, 2023.

McCarthy on Monday bashed the president for not contacting him since their first meeting to discuss the debt ceiling on Feb. 1, which he noted was 75 days ago. The White House meanwhile is standing firm that they want to see a House Republican proposal before talks resume — all while linking McCarthy to Biden’s predecessor.

“Speaker McCarthy is breaking with the bipartisan norm he followed under [former President] Trump by engaging in dangerous economic hostage taking that threatens hard-working Americans’ jobs and retirement savings,” White House spokesman Andrew Bates said in response to the Speaker. “A speech isn’t a plan but it did showcase House Republicans’ priorities.”

Senate Minority Leader Mitch McConnell (R-Ky.) offered this from the chamber floor amid the stalled talks: “President Biden does not get to stick his fingers in his ears and refuse to listen, talk or negotiate. And the American people know that.”

“The White House needs to stop wasting time and start negotiating with the Speaker of the House,” he added. 

Minority Leader Mitch McConnell (R-Ky.) addresses reporters after the weekly policy luncheon on Tuesday, April 18, 2023.

At the New York Stock Exchange, McCarthy said the House Republican Conference will move forward with its own measure “in the coming weeks” to keep the country from a default.

But some of the Speaker’s suggestions are unlikely to pass muster with the administration.

One of the House Republican Conference’s plans, according to McCarthy, is a bill that would lift the debt ceiling this year — only to revisit it again mid-2024 when every House member, about a dozen vulnerable Senate Democrats, and President Biden would be in the heat of campaign season.

Senate Majority Leader Chuck Schumer (D-N.Y.), for one, called McCarthy’s plans for a debt-ceiling extension into 2024 a “terrible idea” that he dismissed immediately.

“Amazingly, one of the few specifics [Speaker] McCarthy has presented is his terrible idea to kick the can down the road for just one year and undergo the same crisis again,” Schumer said. “Why would anyone want to undergo this crisis again, again and again?” 

The White House has also pushed back on another proposal reiterated by McCarthy on Monday that seeks to limit federal spending, with proposals to return discretionary funding levels to 2022 levels “and then limit the growth of spending over the next 10 years to 1 percent of annual growth” without “touching Social Security and Medicare.” 

Republicans have offered few details on just where they would make spending cuts. Bates said that McCarthy “again failed to clearly outline what House Republicans are proposing and will vote on,” adding that he outlined an “extreme MAGA wish list.”

While Biden has insisted on a clean bill to raise the debt ceiling and Democrats have insisted that talks over government spending should be separate from debt limit talks, the Speaker said on Monday that “a no-strings attached debt-limit increase will not pass.”

Ahead of McCarthy’s speech, the White House sent a memo to congressional Democrats, as well as other allies, providing statements from economists, national security experts, and business leaders who have supported raising the debt ceiling without conditions.

The memo cited Trump, who in 2019 said that he couldn’t “imagine anybody ever even thinking of using the debt ceiling as a negotiating wedge.” And, it cited former President Reagan, who said in 1987 that there’s a “special responsibility” for the U.S. to “meet its obligations.” 

Democrats have worked to display themselves as aligned on the debt ceiling and not straying from backing the president’s strategy to get a clean bill, other than some centrists like Rep. Jared Golden (D-Maine) who have floated spending reforms. 

Rep. Jared Golden (D-Maine) is seen during the first day of the 118th session of Congress on Tuesday, January 3, 2023.

Democrats have largely tried to show a contrast with Republicans, who have not displayed a unified plan.

Such is the case with the far-right House Freedom Caucus’ plan, which includes restricting discretionary funding for fiscal 2024 at the 2022 threshold, while keeping defense funding at current levels, in order to balance the federal budget in 10 years. 

Meanwhile, the moderate Republican Main Street Caucus’ pitch includes clawing back billions in coronavirus funds they say have gone unspent, ending the ongoing pause on federal student loans repayment, and returning non-defense discretionary spending to fiscal 2022 levels.

When asked if he has support from his party for the proposals he suggested on Monday, McCarthy told CNBC: “I think I have the support of America because I’ll get the party behind it.”

It remains to be seen whether voters will be influenced by McCarthy’s remarks in New York, argued Nu Wexler, former communications director for the House Budget Committee Democrats.

“McCarthy needs to flip the script. Voters think House Republicans are pirates trying to sink the economy, and they say they just want to steer the ship. Going to New York and looking proactive could move the needle somewhat, but it’s unlikely to shift the political fundamentals,” said Wexler, a partner at Seven Letter.

Meanwhile, Republicans are blaming Biden for not keeping his word about working across the aisle and agreeing to bring McCarthy back to the negotiating table.

“The Speaker has laid out a plan to increase the debt ceiling while turning the spending curve down in a thoughtful way.  This is largely the same debate we had in 2011 with one major difference—Vice President Biden understood the need to work across the aisle to reach bipartisan consensus,” said Stephen Cote, a principal at Mehlman Consulting and former director for legislative affairs at the Office of Management and Budget under former President George W. Bush.

In 2011, then-President Obama, during Biden’s vice presidency, negotiated with House Republicans over raising the debt ceiling and cutting spending. That led to the White House and Congress agreeing to the Budget Reduction Act, in which spending ceilings were imposed on defense and non-defense spending in order to get a deal on raising the debt ceiling.

McCarthy also took the opportunity to bring up Biden’s past voting record dating back to his years as a senator. He outlined that Biden voted four times to raise the debt limit as a senator but now has “ignored” Republicans on the matter.

“What changed Mr. President? I agree with the former, sensible Joe Biden. He knew that our government was designed to find compromise,” the Speaker said. “I just wish the current, extreme Joe Biden would listen to the former Joe Biden, too.”