Republican Representative Kevin McCarthy, Speaker of the U.S. House of Representatives, confirmed on Monday that his party-dominated House will not accept an increase in the public debt ceiling unless accompanied by a cut in spending. The position the White House hastened to condemn.
In a speech on the New York Stock Exchange, McCarthy criticized President Joe Biden for what he called “reckless” spending and urged him to accept “reasonable negotiations” to reach a compromise that would address the growing debt problem without risking default.
The Treasury Department warns that not raising the public debt ceiling until next June will result in the US defaulting on $31.4 trillion in debt; may cause panic among investors.
Reducing spending
“Tackling public debt requires us to sit down together and find common ground and cut spending. Let me be frank, not paying off our debt is not an option,” McCarthy said.
But he stressed that “the future of higher taxes, higher interest rates, increased reliance on China and a dysfunctional economy for Americans” is not an option either.
According to McCarthy, parliament will pass legislation in the coming weeks that will raise the public debt ceiling, including cuts in public spending.
The White House was quick to accuse the Speaker of the House of taking the US economy hostage by setting conditions to raise the public debt ceiling.
condemn
White House spokesman Andrew Bates said: “In a move that “holds the nation’s economy hostage, threatens the jobs and retirement savings of hardworking Americans,” the “Republican vs. Democrat” violates the prevailing rule between the two parties.
Biden and McCarthy held a meeting last February to discuss a possible deal, but failed to reach an agreement.
Republicans are threatening to block the often routine approval of raising the federal public debt ceiling unless Democrats agree to future deep budget cuts first.
President of the European Central Bank, Christine Lagarde, stated that she did not expect the USA to default in paying its debt, adding that such a result would have grave consequences for the world.
“I understand politics and I have participated in politics, but there comes a time when the superior interests of the nation prevail.”
Source: German + French
