White House Is Digging In on Debt-Ceiling Fight With McCarthy

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

(Bloomberg) -- President Joe Biden is digging in against Kevin McCarthy on the debt ceiling as the White House seeks to exploit divisions in the GOP caucus and a House speaker they believe lacks the votes to pass a budget proposal.

Most Read from Bloomberg

Biden and McCarthy have been talking past each other this week as they stake out ground on fiscal reforms, with the debt ceiling in the balance. McCarthy is seeking spending cuts as a condition of a debt-limit hike, while Biden insists the two aren’t linked.

That dynamic intensified this week, when Biden’s team rebuffed McCarthy’s calls for the president to come to the negotiating table, demanding the speaker first cough up a Republican budget detailing their plans.

At the heart of the White House strategy is a calculation that McCarthy might not be able to deliver or can only do so by alienating some factions in his caucus.

The White House, which released its budget three weeks ago, believes McCarthy and House Republicans are dragging their heels on producing a proposal because the caucus can’t agree on one, officials familiar with their thinking said, speaking on condition of anonymity.

There are no signs of imminent talks and Biden seems content to let the standoff drag on as he waits for Republicans to produce a budget blueprint.

“They’re putting our economy in jeopardy by threatening to refuse to pay America’s bills,” the president said earlier this week. “We’re not going to let them undo all the progress we’ve made.”

McCarthy, meanwhile, has sidestepped those White House demands, blaming Biden for the impasse.

“One side is dug in: the president,” McCarthy told reporters Thursday. “It would behoove him to actually sit down and work together. The majority of the American public that’s what they want.”

The Treasury Department is continuing to employ extraordinary measures to avoid a debt-limit breach that would be a devastating blow to the US economy and markets.

The White House on Thursday touted comments made by McCarthy in January, when he told CBS that he thought both Democrats and Republicans should “have to pass a budget” so “the country can see the direction we’re going.” The White House said they agreed and again called for Republicans to produce their own budget.

Biden and McCarthy traded public letters this week. McCarthy said Republicans want to cut spending “to pre-inflationary levels” while “limiting” spending growth going forward, as well as reclaiming unspecified Covid money that’s gone unspent and strengthening work requirements.

Earlier: Biden, McCarthy Fire Off Letters in Duel Over US Debt Ceiling

In response, Biden repeated his demand to see a GOP budget, challenging McCarthy to produce one this week before lawmakers leave for a two-week Easter recess.

House Budget Committee Chair Jodey Arrington told reporters last week that Republicans are finalizing a formal list of spending cuts they’ll demand from Biden in exchange for raising the debt ceiling.

But it’s not clear whether that document will be enough to open talks. The GOP’s full 10-year budget plan will not be released by the April 15 target date.

Biden released a $6.9 trillion budget proposal on March 9. It would trim projected deficits by a cumulative total of $3 trillion over a decade, but still forecasts that the debt would rise to $51 trillion after 10 years, from about $31 trillion now.

--With assistance from Jordan Fabian and Jenny Leonard.

Most Read from Bloomberg Businessweek

©2023 Bloomberg L.P.