Biden Decries ‘Reckless Hostage Taking’ by GOP over Raising the Debt Limit

Washington Post photo by Matt McClain
Senate Majority Leader Charles E. Schumer, shown here in March, wrote that House passage of the Kevin McCarthy-backed bill “offers two choices: either default on the debt or default on America.”

WASHINGTON – President Biden on Monday used a White House event celebrating small-business owners – typically a constituency embraced by Republicans – to call on the GOP-led House to back off its insistence that raising the nation’s debt ceiling be conditioned on steep spending cuts and rolling back several of Biden’s priorities.

Speaking in the Rose Garden, Biden said lawmakers need to protect the economy by raising the debt limit without what he characterized as “reckless hostage taking” by House Speaker Kevin McCarthy (R-Calif.) and his allies. Biden argued the consequences would be dire – including for small-business owners – if the spending cuts required by the bill that narrowly passed the House last week ever materialized.

Among other things, Biden said, the bill would “claw back billions of dollars meant for small businesses and would gut training and support.” Biden has previously threatened to veto the legislation in the exceedingly unlikely event it passes the Senate.

His event Monday was designed in part to emphasize the severity of the spending cuts that would be required by the bill – and to again warn of the consequences if a bill isn’t sent to his desk in time to avoid default, and the United States for the first time in its history becomes a “deadbeat nation.”

Biden called a threatened default “totally irresponsible,” adding: “It will lead to higher interest rates, higher credit card rates. Mortgage rates will skyrocket. Working people, middle class and seniors will pay the price.”

Separately on Monday, Senate Majority Leader Charles E. Schumer (D-N.Y.) announced a move also aimed at increasing public awareness of the effects of the House GOP bill: The Democratic-led Senate will hold hearings on it starting this week.

In a letter to colleagues, Schumer said the aim of the hearings, to begin Thursday, will be “to expose the true impact of this reckless legislation on everyday Americans.”

The hearings will be the first concrete action the Senate has taken after weeks of verbal jabs directed at McCarthy and his leadership team. Biden is insisting Congress pass a bill raising the limit with no conditions, as it did three times during the administration of his Republican predecessor, Donald Trump.

Schumer wrote that House passage of the McCarthy-backed bill “offers two choices: either default on the debt or default on America, forcing steep cuts to law enforcement, veterans, families, teachers.”

“Democrats will not allow it,” Schumer said in the letter, first reported by Punchbowl News.

Without action by Congress, the nation could default on its debt as soon as six weeks from now. The debt ceiling is the legal limit on how much money the country can borrow to pay its bills.

Schumer is hoping the hearings will not only enlighten the public but also change the dynamic in his chamber. Under Senate rules, he would need 60 votes to advance a clean bill raising the debt limit without conditions – and it does not appear he has the requisite Republican votes at this point.

McCarthy – speaking to reporters Monday in Israel, where he is traveling this week – continued to blame Biden for the standoff.

“The only way you solve problems is you negotiate. And I’m looking forward to the president changing his mind in negotiating with us,” McCarthy said.

“The president still hasn’t talked to me. I’m a little like [Israeli Prime Minister Benjamin] Netanyahu,” McCarthy added. McCarthy has been critical of Biden in recent days for not having invited Netanyahu to Washington since his return to the role of prime minister. If that doesn’t happen soon, McCarthy suggested, he will invite Netanyahu to address Congress.

The House Republican proposal, dubbed the Limit, Save, Grow Act of 2023, would raise the borrowing limit into next year – either until the government incurs another $1.5 trillion in arrears, or through the end of March 2024, whichever occurs first.

Republicans coupled the increase with aggressive caps on federal spending, rolling back the budgets for key agencies to the levels adopted in the 2022 fiscal year and then limiting future growth to 1 percent annually for the following decade.

In total, these and other cuts are expected to save the government roughly $4.8 trillion over the next 10 years, according to the nonpartisan Congressional Budget Office. Republicans have promised to focus those cuts on federal health care, education, science and labor programs, while sparing the military.

While the cuts are not specified – they would be determined later during the appropriations process – Democrats have done analyses projecting how deep the cuts would need to be.

In his letter, Schumer predicted that, if enacted, the GOP bill would “gut Medicaid for over 20 million Americans,” terminate food assistance for more than 1 million people and eliminate Pell grants for tens of thousands of college students per year.

The House bill – which Schumer referred to as the “Default on America Act” – also would repeal several of Biden’s recent accomplishments, including a bevy of tax credits meant to spur the adoption of electric vehicles and other clean technologies.

It would end the president’s plan to waive up to $10,000 from millions of borrowers’ student loan debts. It would limit the power of federal agencies to issue regulations on a wide array of industries.

And it would impose a raft of new rules on low-income families that receive federal benefits, including food stamps and Medicaid, requiring them to work longer hours in exchange for help – or risk losing aid entirely.

At his event Monday, Biden hosted small-business award winners from all 50 states. Both he and Vice President Kamala Harris touted the administration’s commitment to their well-being

“President Biden and I will continue to fight to make sure every small-business owner in our nation and every aspiring small-business owner has the opportunity to not only survive, but thrive,” Harris said.

According to a White House analysis released before the event Monday, the casualties of the House GOP bill would include $2 billion from what it described as “a vital small business initiative,” effectively taking away capital for up to 10,000 small businesses and support for 100,000 jobs.

The White House said the GOP bill would also lead to the elimination of free business counseling for 295,000 small-business owners and delay certification and training to at least 15,000 small business contractors.