House Speaker Kevin McCarthy (R-Calif.) sought to reassure investors Monday that the U.S. government will not see a first-ever default on its debt as a result of the looming showdown later this year over the Treasury Department’s borrowing limit.
In livestreamed remarks from the hallway just outside his office, McCarthy said: “Defaulting on our debt is not an option. But neither is a future of higher taxes, higher interest rates and an economy that doesn’t work for working Americans.”
Though touted as “an address,” the remarks, taking roughly 10 minutes, broke little new ground in the standoff. The White House has said it will not negotiate over the limit; Republicans say they want unspecified budget changes in return for lifting the debt ceiling, with an implied threat of default if they are not placated.
In a response to McCarthy’s remarks sent to reporters only minutes before they were delivered, White House spokesperson Andrew Bates said Republicans want to throw the economy into a tailspin through a debt default.
“Tomorrow, President Biden will show the American people his plan to build on the unprecedented deficit reduction his leadership has already delivered by having the richest taxpayers and big corporations pay their fair share and lowering prescription drug prices,” Bates said of Biden’s State of the Union address Tuesday night.
In his talk, McCarthy repeated several points Republicans have made before as they seek to paint the White House as unreasonable in wanting no strings attached to a debt limit boost. He said that Social Security and Medicare are “off the table” and that Republicans would “preserve our ability to defend this nation against threats abroad,” which could be seen as a pledge of no defense spending cuts.
“Defaulting on our debt is not an option. But neither is a future of higher taxes, higher interest rates and an economy that doesn't work for working Americans.”
The government bumped up against the $31.38 trillion limit in January, forcing the Treasury Department to dip into its bag of accounting of maneuvers to keep from breaching it.
While those “extraordinary measures” will give the Treasury some time to keep borrowing, it’s unclear exactly how much extra time it will have. Treasury Secretary Janet Yellen has told lawmakers she did not expect to breach the debt ceiling until at least early June but offered no more specific timeline.
A fight over the debt limit in 2011 between the Barack Obama White House and a Republican House brought the Treasury Department to within days of its claimed date on which it could no longer legally borrow or pay all the bills due. Though a deal was ultimately reached, the episode saw credit ratings agency Standard & Poor’s downgrade the creditworthiness of U.S. debt for the first time ever.