Biden Admin Says President Will Veto McCarthy Debt Limit Deal

President Joe Biden is playing hardball with House Speaker Kevin McCarthy (R-Calif.) over a bill that would pair spending cuts with an increase to the federal debt limit. But will he come out on top?

Last week, House Republicans released their plan for a debt limit increase—the Limit, Save, Grow Act of 2023. The Republican bill would allow the United States to add up to $1.5 trillion in additional debt until March 31, 2024. In exchange, Republicans say the legislation would provide more than $4.5 trillion in savings to American taxpayers.

But the White House Office of Management and Budget (OMB) has already rejected the legislation and vowed a veto from the president’s office if the bill passes in both the Republican-majority House and the Democrat-majority Senate. The Biden administration has repeatedly insisted on a “clean” debt limit increase, refusing any proposals to cut spending or reform government programs even as the United States has racked up approximately $30.5 trillion in debt.

The OMB statement compared the debt negotiations to a hostage situation, saying, “The President has been clear that he will not accept such attempts at hostage-taking.”

The Republican proposal would achieve much of its spending reductions by cutting funding from Biden’s budget priorities. The bill would specifically set annual discretionary spending at Fiscal Year 2022 levels and would regulate discretionary spending growth to 1 percent annually over the next decade. The bill would also rescind any unspent pandemic-era relief funds, and prohibit executive actions Biden has taken to cancel student loans.

Clean energy tax credit expansions in the Biden-backed 2022 Inflation Reduction Act (IRA) would also go away. The Republican bill would also rescind funding increases for the Internal Revenue Service (IRS).

But some Democrats are calling on Biden to negotiate with McCarthy. While they haven’t endorsed the Republican proposal for reforming federal spending, they have rejected Biden’s position of a no-conditions increase to the federal debt limit.

“Our elected leaders must stop with the political games, work together and negotiate a compromise,” said McCarthy’s office in a statement on Monday, noting that at least 11 Democratic lawmakers have voiced support for negotiations.