McCarthy’s debt-limit plan would ‘take a hatchet’ to key programs, White House says

The White House on Thursday stepped up criticism of legislation unveiled by House Speaker Kevin McCarthy (R-Calif.) that would condition support for raising the debt limit on deep spending cuts, arguing that the approach would “take a hatchet to programs Americans rely on every day to make ends meet.”

“Every House Republican who votes for this bill is voting to cut education, veterans medical care, cancer research, Meals on Wheels, food safety and law enforcement,” White House press secretary Karine Jean-Pierre said in a statement in which she also warned of other far-reaching consequences, including loss of health insurance and higher energy bills for some Americans.

McCarthy’s legislation, unveiled Thursday, would cut the federal budget back to levels adopted in fiscal 2022, which could amount to $130 billion of spending cuts for 2024.

The bill does not specify the exact agencies or programs on the chopping block, leaving the task to lawmakers on congressional appropriations committees.

While that could make it easier for some Republicans to support the legislation, the lack of specificity has left GOP lawmakers wide open to criticism about where the cuts would be likely to occur. Given that Republicans have signaled that they will leave the Pentagon and services for veterans untouched, reductions almost certainly would have to be made in a wide array of health, education, energy and other programs.

Jean-Pierre’s statement offered a preview of attacks Democrats are likely to direct at Republicans in next year’s elections, particularly those who represent districts Biden carried in 2020.

McCarthy also has proposed capping any growth in federal agencies’ future budgets at 1 percent, further hoping to save the government money.

Both Senate Majority Leader Charles E. Schumer (D-N.Y.) and House Minority Leader Hakeem Jeffries (D-N.Y.) offered fresh criticism of the legislation and the House Republican tactics Thursday.

Schumer, speaking on the Senate floor, called McCarthy’s bill a “partisan wish list masquerading as legislation’ and said it has “no chance” of moving forward in the Senate.

“It doesn’t move us any closer than we were yesterday to avoiding default,” Schumer said.

Jeffries warned of “catastrophic consequences” if the United States defaults on its debt.

“A default will crash the stock market and impact people’s retirements,” he said. “A default will trigger a job killing recession, and a default will dramatically increase costs on everyday Americans. That is not to be played with.”

In her statement, Jean-Pierre accused McCarthy of having sided “with the extreme MAGA wing of his conference,” a reference to former president Donald Trump’s campaign slogan, “Make America Great Again.”

“MAGA House Republicans are holding the American economy hostage in order to take a hatchet to programs Americans rely on every day to make ends meet,” Jean-Pierre said. “House Republicans must avoid default and stop playing economic brinkmanship with the American people’s livelihoods and retirements.”

During a briefing later Thursday at the White House, Jean-Pierre reiterated some of the potential cuts and mentioned several GOP lawmakers by name whose districts have benefited from the announcement of planned manufacturing facilities lured by tax credits in legislation McCarthy would now roll back.

“Will Congresswoman Marjorie Taylor Greene vote to eliminate the investments helping to create 2,500 solar manufacturing jobs in her district?” Jean-Pierre asked of the Georgia congresswoman.

McCarthy is hopeful that passage of the legislation in his chamber will drive Biden to the negotiating table. Biden thus far has insisted on passage of a bill that raises the debt limit without conditions — as Republicans were willing to do three times during Trump’s presidency. After that, he has said, he will talk to Republicans about spending cuts.

At a forum Thursday, BlackRock Inc. Vice Chairman Philipp Hildebrand said a U.S. default on its debt must not happen.

‘All we can do is to pray that everyone in the United States understands how important the sanctity of the sovereign signature of the leading currency, of the leading bond market, of the leading economy in the world is,” Hildebrand, a former president of the Swiss central bank, said at the Bloomberg New Economy Gateway Europe forum. “This is not something you want to mess with.”

During an appearance Wednesday at a labor union facility in Maryland, Biden assailed the proposals coming from Republicans as “wacko” notions that could lead to a default.

At least one Senate Democrat would like to see Biden start negotiations with McCarthy. In a statement Thursday, Sen. Joe Manchin III (D-W.Va.) said it has been 78 days since Biden and McCarthy last met.

“This signals a deficiency of leadership, and it must change,” Manchin said. “The fact is we are long past time for our elected leaders to sit down and discuss how to solve this impending debt ceiling crisis.”

Manchin praised McCarthy for putting forward a bill but noted he doesn’t agree with everything in it.

McCarthy’s bill also would unwind some of Biden’s priorities and recent legislative accomplishments, including his program to cancel college student debt. It would repeal broad portions of recently enacted tax policies meant to incentivize the deployment of green energy and require millions of low-income Americans who receive food stamps and health insurance from the federal government to work longer hours in exchange for benefits.

McCarthy plans to bring the legislation to the House floor as soon as next week. Republicans have 222 votes in the House, so the speaker can afford to lose only four to prevail.

At the center of the fight is the debt ceiling, the legal limit on how much the United States can borrow to pay its bills.

The United States hit its current limit — set at $31 trillion — in January, prompting the Treasury Department to start making special maneuvers to continue paying federal bills and stave off a fiscal calamity. But the Biden administration may run out of options as soon as early June.

Tony Romm contributed to this report.