Biden rejects GOP spending cuts, warns of catastrophic government default

President Biden on Wednesday rejected a Republican plan to slash government spending and raise the debt limit, assailing the proposals as “wacko” notions that would cause a catastrophic government default.

Moments after Speaker Kevin McCarthy (R-Calif.) discussed the GOP plan on the House floor, the president stood in a Maryland union hall, insisting that Congress pass a stand-alone bill to raise the debt limit — as Republicans did three times during the Trump administration.

“We’ve never ever defaulted on the debt. It would destroy this economy. And who do you think will hurt the most? You hard-working people, the middle class, the neighborhoods I got raised in — not the superwealthy and the powerful, but working folks,” Biden said.

To McCarthy and Republicans, the president added: “Take default off the table. And let’s have a real serious detailed conversation about how to grow the economy, lower costs and reduce the deficit.”

McCarthy on Wednesday unveiled a plan to raise the debt ceiling into next year, slash federal spending by potentially $130 billion, and unwind some of Biden’s priorities and recent legislative accomplishments, including his program to cancel college student debt.

McCarthy plans to bring the legislation to the House floor as soon as next week, estimating that it will save the government $4.5 trillion over the next decade. But its path to passage is complicated: Republicans have 222 votes, so the speaker can only afford to lose four to prevail. Democrats, meanwhile, vehemently oppose the measure, ensuring its failure in the Senate.

McCarthy, who called the plan the “Limit, Save, Grow Act of 2023,” mocked Biden for “skipping town” by traveling to Maryland and insisted that the president sit down and discuss the GOP plan.

“The American people have elected a divided government. And our government is designed to find compromise,” McCarthy said on the House floor. “That’s why the House, the Senate and the White House should be negotiating a responsible debt limit increase right now.”

Biden, in his speech, highlighted the fact that two former Republican presidents — Ronald Reagan and Donald Trump — have warned against brinkmanship over the debt ceiling.

“The speaker likes to quote his hero, Ronald [Reagan]. … Reagan said debt ceiling brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits … the United States has a special responsibility to itself and to the world to meet its obligation.”

The actions and speeches underscored the standoff between the president and House Republicans, who have threatened default unless Biden agreed to spending cuts.

Washington must borrow money to pay for expenses that both parties have incurred, but it can do so only up to a maximum limit allowed by federal law. Lawmakers periodically must suspend or raise that threshold, or the government cannot cover its costs, possibly including interest payments on bonds, triggering a default.

The United States technically reached the debt limit — now set at roughly $31 trillion — earlier this year. That prompted the Biden administration to begin taking special budgetary measures in January so it could continue borrowing. But those moves are temporary solutions meant to buy extra time on Capitol Hill.

The U.S. government has said those measures could run out sometime between June and September.

McCarthy had delivered a speech on Wall Street on Monday, and Biden said that the House speaker “proposed huge cuts to important programs that millions of working- and middle-class Americans count on.” The president said the GOP proposal would result in higher costs for child care and cuts to the number of people who administer Social Security and Medicare, causing longer wait times.

Biden’s event in Accokeek, Md., followed a call Tuesday night with Senate Majority Leader Charles E. Schumer (D-N.Y.) and House Minority Leader Hakeem Jeffries (D-N.Y.). According to the White House, the three Democrats “discussed House Republicans’ brinkmanship over default and how their recklessness could crash the economy.”

“President Biden, Leader Schumer, and Leader Jeffries agree that we won’t negotiate over default and Republicans should pass a clean bill like they did three times in the previous administration,” said a White House readout of the call, referring to the three occasions Congress raised the debt limit during the Trump administration without Republicans insisting on conditions.

Biden’s remarks served as a blunt message to McCarthy: Don’t waste your time cobbling together a bill that might clear the House but will go nowhere in the Democratic-led Senate.

McCarthy, meanwhile, is hoping that passing a bill in the House will force Biden to the negotiating table, regardless of its prospects in the Senate.

To even get to that point, however, McCarthy must navigate the push and pull of his caucus. Members of the House Freedom Caucus are trying to add even more conservative priorities to the debt limit bill. That could pressure more-moderate Republicans to vote for proposals that might not be popular in their districts.

With Wednesday’s event, the White House was seeking to draw a contrast between Biden’s venue — the International Union of Operating Engineers Local 77 Training Center, where the White House said he would “be joined by hard-working Americans” — with that of McCarthy, who presented House Republican priorities Monday during a speech on Wall Street.

Among other things, Biden focused on the effect of an advertised GOP provision that would roll back spending levels at most government agencies and cap future budget growth — an issue the White House said Biden discussed in his call Tuesday night with Schumer and Jeffries.

“They discussed what we know about House Republicans’ extreme MAGA spending cuts, which include devastating cuts to veterans and education, taking food assistance and health care away from millions of people, and sending manufacturing overseas — all just to pay for their tax cuts for the superwealthy and corporations,” the White House readout of the call said.

According to the White House, Biden also reiterated his willingness to discuss budget priorities with McCarthy apart from the debt limit legislation. Republicans have yet to produce a budget plan, which has complicated such talks. Biden unveiled his budget March 9.

In remarks on the Senate floor Wednesday, Schumer also cited Trump’s warning.

“For all his terrible flaws … even Donald Trump understood what House Republicans today do not,” Schumer said. “The full faith and credit of the United States must never be taken hostage.”

Tony Romm contributed to this report.