Speaker Kevin McCarthy on Monday previewed what he hopes House Republicans can pass in the next few weeks to raise the debt ceiling during a speech at the New York Stock Exchange.
“So here is our plan: In the coming weeks, the House will vote on the bill to lift the debt ceiling into the next year, save taxpayers trillions of dollars, make us less dependent on China, curb our inflation, all without touching social 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 of GOP demands amid an impasse between the two parties over how to resolve the issue. There is no bipartisan agreement in sight and Democrats continue to argue that the debt limit should be lifted without any conditions attached. The Republican bill would not be expected to pass in the Senate.
The GOP’s plan for a one-year debt limit increase, said McCarthy, would roll back domestic, non-defense spending to 2022 levels. McCarthy said they would try to pass the GOP plan in the next few weeks.
In a gilded ballroom, McCarthy touted the GOP proposal to a crowd who worked on the exchange floor and at nearby firms, saying: “Simply put, it puts us on a fiscally responsible path in three ways: It limits, saves, and it grows.”
Those assurances came as small groups of protesters stood in front of the stock exchange, accusing McCarthy of looking to cut funding from Medicare.
McCarthy, meanwhile, repeatedly slammed President Joe Biden for what he characterized as his unwillingness to negotiate.
“Without exaggeration American debt is a ticking time bomb that will detonate unless we take serious responsible action. Yet, how has President Biden reacted to this issue? He has done nothing. So in my view, and I think the rest of America, it’s irresponsible,” he said.
The White House criticized McCarthy on Monday over the GOP demands. White House deputy press secretary Andrew Bates said in a statement that McCarthy is “engaging in dangerous economic hostage taking.” Bates said McCarthy “failed to clearly outline what House Republicans are proposing and will vote on,” arguing McCarthy only “referenced a vague, extreme MAGA wish list.”
But White House officials will be closely watching to see if McCarthy can deliver on the next steps he laid out: passing a bill in the coming weeks that will raise the debt ceiling and curb spending. If he can do that, Biden would be open to meeting with McCarthy again, a senior White House official said.
While sounding optimistic, getting to 218 votes is a major hurdle for Speaker McCarthy and he can only afford to lose four votes.
“I know there’s a place where we can come to an agreement,” said McCarthy. “It’s just hard when people think that there’s not $1 that you can cut out of government spending today.”
While McCarthy didn’t specify where Republicans plan to cut spending, he did express wishes 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 increase American energy production and grow the economy by undoing nearly all of President Joe Biden’s climate policy. It is expected to be dead on arrival in the Senate.
McCarthy used quotes from former Vice President Biden when he was dealing with the debt crisis in 2011. “He said ‘you can’t govern without negotiating.’ Well, what changed, Mr. President? I agree with the former sensible Joe Biden. He knew that our government is designed to find compromise. I just wish the current extreme Joe Biden would listen to the former Joe Biden.”
The line brought a round of applause from the audience, the only that occurred during the otherwise subdued speech.
The administration reiterated their position this morning in a statement from White House deputy press secretary Andrew Bates, saying, “there is one responsible solution to the debt limit: addressing it promptly, without brinksmanship or hostage taking — as Republicans did three times in the last administration and as presidents Trump and Reagan argued for in office,” pointing to a quote from former President Donald Trump.
Speaker McCarthy said that he had not met with Biden since early February.
Through his speech, McCarthy urged Wall Street to pressure the Biden administration to accept spending cuts. “If you agree, don’t sit back, join us,” he said.
He also said that he wasn’t monitoring stock market conditions as he headed into debt ceiling negotiations. “Markets are reacting to work we’ve done, so I shouldn’t be monitoring you,” he said, directly addressing traders. “I should monitor what we’re doing, and that’s exactly what I do.”
The reason markets are currently going up, he said, “is because the president has ignored us for 75 days.” He did not clarify why that would drive stocks higher. Markets were trading slightly lower Monday.
McCarthy ended his speech by invoking the drawn-out speakership battle. “I will never give up. I will never give up on you, we will not rest until the economy is healthy.”
He spoke for nearly 30 minutes and received another round of applause at the conclusion of his teleprompter speech.
During a short discussion that followed the speech, John Tuttle, the vice chairman at NYSE, asked McCarthy about the Federal Reserve’s economically painful regimen of rate hikes meant to fight sticky inflation.
“Let me first say, the Fed is an independent entity,” said McCarthy, marking a clear distinction between his views and those of former President Donald Trump. Trump repeatedly attempted to attack Fed credibility while serving as president.
Still, McCarthy was not without criticism. If “as an independent entity they had acted earlier” and brought interest rates up to 3%, he said, “then we wouldn’t be in this situation.” Interest rates currently sit at a range of 4.75% and 5% and inflation as measured by the Consumer Price Index is hovering at around 5% on an annual basis.
The House Speaker criticized the Fed’s decision to keep interest rates near zero for the majority of the past decade, creating “easy money” for Wall Street. “We also realized what we were doing,” he said.
Federal spending, said McCarthy, was a key driver of inflation and his role as a policymaker “is to cut back the spending that created inflation to begin with.”
While pandemic-era government stimulus spending likely added to elevated inflation rates, a number of other factors also contributed to higher prices. Those include Russia’s war in Ukraine, which raised food and energy prices; and pandemic-era supply chain disruptions, which caused key material shortages that gummed up critical pieces of the economy, such as the auto industry.
Earlier this month, European leaders including French President Emmanuel Macron and European Commission chief Ursula von der Leyen traveled to Beijing with hopes of driving peace in Ukraine but also balancing business ties.
Last week, Brazilian President Luiz Inacio Lula da Silva also met with Chinese leadership. He said in a press 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 of 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 a way to make peace,” Lula said.
The United States and the European Union have been major suppliers of arms and aid to Ukraine following Russia’s invasion.
McCarthy expressed concern over these developments on Monday but said the Republican debt ceiling plan could solve some of those problems.
“We all know it’s difficult in this nation to build anything, it’s difficult to work with the government,” he said. “People will stream into other countries that make it easier, that make it more welcoming for capital.” Elected officials should sit down and use these debt ceiling negotiations to cut red tape and business regulations, he said. “You can utilize the debt ceiling as the opportunity to do it,” he added.
“The other fear we all should have is the grouping and the growth of China, Russia, North Korea and Iran,” said McCarthy. “We should not ignore that.”
The movement away from the dollar as a reserve currency is also cause for concern, he said.
“The only way the dollar fails to become the reserve currency is not based on what China or other countries do,” said McCarthy. “It’s what we do from within. And spending too much money, putting ourselves in $31 trillion of debt, is a greater 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.