House Speaker Kevin McCarthy (R-Calif.) will travel to the New York Stock Exchange for a speech Monday, potentially setting the stage for the next round of debt limit back-and-forth between House Republicans and the White House.
McCarthy’s office announced the upcoming speech Tuesday, but gave few details about its content, aside from it would be “on the economy.”
But with lawmakers returning to Washington next week after a two-week break from the Capitol, one possible bet is he will use it to try to convince Wall Street that the White House’s intransigence on dealing on the debt ceiling raises the odds for an unprecedented default on U.S. Treasury debt.
So far, the financial markets have been relatively unconcerned by the whole would-be drama, having seen many previous iterations of the standoff get resolved in the nick of time and because the Treasury’s “drop dead” date by which it needs the $31.38 trillion ceiling boosted or suspended won’t happen until July or August.
“We’re never going to move a bill that just raises the debt ceiling.”
- House Speaker Kevin McCarthy (R-Calif.)
In an interview with Bloomberg TV on April 5, McCarthy warned that U.S. financial markets should be worried that no deal will be struck.
“We’re never going to move a bill that just raises the debt ceiling,” he said, even though the White House has not budged from its demand that a debt ceiling boost have no conditions.
One of McCarthy’s top informal lieutenants among House Republicans, Rep. Patrick McHenry (R-N.C.), sounded similarly dour at an event sponsored by Punchbowl News. McHenry said in late March he had “never been more pessimistic about where we stand with the debt ceiling.”
Republicans may hope jittery financial markets will bring Biden to the table, even as the White House would likely say they would be all the more reason to simply raise the debt limit unconditionally.
McCarthy could also unveil a new, more detailed list of demands that House Republicans want fulfilled before agreeing to boost the debt ceiling, putting some meat on their general idea that spending be reined in as a condition.
But President Joe Biden has complained Republicans haven’t passed a budget resolution yet, even though that would not add much in the way of detail to the Republican stance and could endanger McCarthy’s standing among his fellow Republicans.
So far, the most specific McCarthy has gotten has been to send a letter to Biden asking for cutting annual spending by agencies and on programs to “pre-inflationary” levels, rescinding unspent federal COVID aid, imposing additional work requirements for some federal benefits and enacting unspecified policies on border security and energy production.
In 2011, faced with a similar impasse, then-House Speaker John Boehner of Ohio made a speech before the New York Economic Club to lay out his party’s central demand that any boost in the debt ceiling be matched by at least the same amount of spending cuts. That was in May of that year.
McCarthy could also outline the House GOP’s next legislative move to try to jumpstart negotiations, though it remains unclear what bill that would be.
There’s been speculation Republicans could try to move a short-term boost in the debt ceiling, both to give them time to agree on a package of demands that can pass with their narrow House majority and to line up the issue closer to the end-of-fiscal year government shutdown deadline of Sept. 30 when they may have more leverage over the White House.
Republicans could also move a bill to force the Treasury Department to prioritize debt payments and certain programs, like Social Security and Medicare, in the event the Treasury runs out of room under the debt limit and can’t issue debt to pay all of the government’s bills. But a prioritization bill would not pass the Senate and would be seen by many economists and possibly credit ratings agencies as just another form of default.
McCarthy warned at a press conference on March 30 before lawmakers left Washington that Republicans could pass something on their own if Biden did not come to the bargaining table.
During his Bloomberg TV interview, McCarthy hinted Republicans did have a plan. “When we come back, we might make some news,” he said.