Channeling Reagan, Speaker McCarthy Lays Out Debt Ceiling Framework

With the America likely to hit the debt ceiling in just a few weeks, Speaker McCarthy has tried to rally Wall Street around his plan to force President Biden to the negotiating table, even as the White House holds out. In a 40-minute speech at the New York Stock Exchange Institute on Monday, Mr. McCarthy outlined the Republican plan to cut spending so that financial security can be achieved for “every person, in every community, in every corner of the country.“In the coming weeks, the House will vote on a bill to lift the debt ceiling into the next year,” the speaker said. Republicans will “save taxpayers trillions of dollars, make us less dependent on China, curb our high inflation — all without touching Social Security and Medicare.” Mr. McCarthy said the president “continued to hide” as Republicans developed the broad strokes of their plan. In 1985, President Reagan traveled to Manhattan to speak to traders and investors before the opening bell. Fresh off his landslide re-election victory, Mr. Reagan laid out an economic program that would “turn the bull loose” — a spirit of optimism that Mr. McCarthy is hoping to inspire. Senator Schumer responded to the speaker on Monday afternoon during a press conference on Capitol Hill. “One thing is clear from this morning’s theater at the New York Stock Exchange,” the Senate majority leader said. “Democrats want to avoid defaulting on our country’s debts. Meanwhile, Speaker McCarthy continues to bumble our country toward a catastrophic default.”“To date, Speaker McCarthy has yet to produce any concrete plan as to the cuts he would make,” Mr. Schumer added. For Mr. Biden’s part, he has said that he would sit down with the speaker once the GOP released its budget proposal, which it has not done. The White House released its plan in March. According to a recent report from the New York Times, Mr. McCarthy has had somewhat of a falling out with the chairman of the House budget committee, Congressman Jodey Arrington. Not only did Mr. Arrington float the idea of replacing Mr. McCarthy as Republican leader with his current no. 2, Congressman Steve Scalise, but Mr. Arrington also told reporters that Republicans had laid out a framework for their budget — something the speaker later said was not true. Some members of Congress told the Times that Mr. McCarthy views Mr. Arrington as “incompetent” and incapable of leading the budget development process. The Republican leadership in Congress has offered a few areas of negotiation in recent weeks: returning non-defense spending to pre-pandemic levels, reclaiming unspent Covid emergency funds, placing work requirements on certain entitlement programs, promoting energy development, and securing the border. Mr. McCarthy called on Wall Street workers and managers to put pressure on the White House, highlighting the cold shoulder the speaker has received since his first meeting with the president in February. “If you agree, don’t sit back,” the speaker told the crowd. “Join us. Join us in demanding a reasonable negotiation, a responsible debt ceiling, an agreement that brings spending under control.”Mr. McCarthy has blamed Mr. Biden for much of the financial precarity the country now faces, saying his policies since 2021 have led to “record inflation and the hardship it causes, rising interest rates, supply chain shortages, instability in the banking system, and uncertainty across the board.”Mr. McCarthy’s speakership hangs in the balance during these debt ceiling negotiations. In his fight to win the gavel in January, he made a number of concessions to the Freedom Caucus and its far-right ideological allies, including allowing for a rule change that permits any individual member to come to the floor and call for a vote of no confidence in the speaker. Should these debt ceiling negotiations leave conservatives dissatisfied, Mr. McCarthy could face another days-long fight for the House’s top job. While Mr. McCarthy is attempting to satiate his right wing and get all of his members on board, some Democrats say Mr. Biden’s no-compromise position is out of the same playbook he used as a negotiator during debt ceiling talks in 2011. The Tea Party movement had just elected a not-insignificant number of representatives at the time, and the new crop of legislators refused to raise the ceiling without a significant package of tax and spending cuts.That standoff was the closest the United States has ever come to defaulting on its debts. At the time, Standard & Poor’s downgraded the country’s credit rating for the first time in history, to AA+ from AAA. In the weeks surrounding the negotiations, the S&P 500 index fell by more than 15 percent and 10-year Treasury yields dropped by more than a third. Speaker Boehner and President Obama worked long hours to find a compromise, only to have Tea Party-aligned representatives reject many of the White House’s concessions as not going far enough. Talks between Messrs. Obama and Boehner eventually fell apart, forcing Vice President Biden to work alongside former Senate colleagues on a bipartisan deal that passed just 48 hours before the deadline.Messrs. Biden and McCarthy met for their first debt ceiling negotiation on February 1 and have not met since. According to an estimate from the Department of the Treasury, the debt ceiling could be breached later this summer.

Channeling Reagan, Speaker McCarthy Lays Out Debt Ceiling Framework

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