House Speaker Says Democrats Should Limit Spending to Avert U.S. Debt Default

WASHINGTON, Jan 15 (Reuters) – House Speaker Kevin McCarthy said on Sunday he believed Democrats would agree to limit government spending to avoid a U.S. debt default, an idea he wanted to discuss with President Joe Biden.

Republicans who now control the House of Representatives have threatened to use the debt ceiling as leverage to demand spending cuts from Biden’s Democrats, who control the U.S. Senate.

That has raised concerns in Washington and Wall Street about a brewing fight at least as damaging as the protracted battle in 2011 that led to a brief downgrade of the U.S. credit rating and years of forced cuts to domestic and military spending.

“I want to sit down with him right now, so there’s no problem,” McCarthy said in an interview with Fox News, referring to Biden. “I’m sure he knows we can change some places and put America on a track where we can save those rights instead of bankrupting them the way they’ve been spending their money.”

McCarthy pointed to the Trump-era agreement reached by U.S. lawmakers in 2019 suspending the statutory debt ceiling on Treasury borrowing as evidence that such a compromise is possible.

“I believe we can sit down with anyone who wants to work with us. I believe this president could be that person,” he said.

House Oversight Committee Chairman James Comer said on Sunday he hoped a debt default could be avoided but put the onus on Democrats to agree to spending cuts.

“In the midterm elections, Republicans were elected with the mandate of the American people. We’re running on the basis that we’re going to get serious about cutting spending,” Comer said in an interview on CNN’s “State of the Union.”

“So the Senate is going to have to acknowledge the fact that we won’t budge until we see meaningful reform in spending.”

US Treasury Secretary Janet Yellen said on Friday that the US could hit the legal debt limit of US$31.4 trillion on January 1. 19, forcing the Treasury to initiate unconventional cash management measures that could prevent defaults by early June.

Congress created the debt ceiling in 1917 to give the government more flexibility in borrowing, and each increase must be approved to ensure the U.S. meets its debt obligations and avoids a catastrophic default.

Reporting by Doina Chiacu and Katharine Jackson; Editing by Lisa Shumaker and Grant McCool

Our Standards: The Thomson Reuters Trust Principles.

Source link