Republican U.S. House Speaker McCarthy to pitch spending cuts on Wall St

In a speech at the New York Stock Exchange on Monday, Republican U.S. House Speaker Kevin McCarthy intends to argue for expenditure reductions to go along with raising the government’s $31.4 trillion debt cap.

He makes his address as the federal government approaches the point this summer when it will no longer be able to pay its debts. That would result in a historic default that would jolt the economies of the United States and the rest of the world if the divided Congress did nothing.

The White House has insisted that Congress raise the borrowing limit without conditions, as it did three times under President Joe Biden’s Republican predecessor, Donald Trump, and Democrats, who also control the Senate, have been at odds with Republicans over this issue for months.

On Monday, McCarthy rebutted Democratic claims that his caucus was endangering the American economy by remaining inactive.

Make no mistake: President Biden’s administration is more likely to bumble into the first default in our country’s history the longer he waits to be reasonable and reach consensus, McCarthy warned on Twitter before to his address, which is scheduled to begin at 10:00 ET (1400 GMT).

As the next presidential election campaign heats up, the Republicans in charge of the House of Representatives will attempt to unite around a plan that would raise the cap until May 2024 in exchange for significant expenditure cuts. It seems improbable that such a measure would obtain the Democratic support it would require to become law.

McCarthy is the leader of a contentious caucus with a slim 222-213 majority that includes a sizable number of hardliners who demand drastic budget cuts and downplay the dangers of not raising the debt ceiling. House Republicans have not yet presented a budget proposal of their own, which according to Biden would be an essential first step in negotiations on spending.

“I have no idea about what we are negotiating. On Saturday, Biden told reporters, “I don’t know what they want.

The nation’s debt would be reduced by about $3 trillion over ten years, according to the White House’s own budget proposal made last month, though it did so by raising taxes on businesses and the rich rather than by reducing expenditure.

A range of debt-reduction options were presented by the nonpartisan Congressional Budget Office last month, and it was revealed that raising tax revenues would have a much greater impact than reducing spending.

RANGE OF OPTIONS
Republicans have been debating slashing funding for a variety of activities, from environmental protection to health care to law enforcement to homeland security. This might be accomplished by either freezing expenditure at levels from 2022 or permitting annual increases of just 1% for a decade, which would effectively reduce funding because they wouldn’t keep up with inflation or population growth.

The CBO predicts that Social Security and Medicare healthcare and retirement programs will roughly quadruple in cost over the next ten years, which is one of the key causes of the debt that Republicans complain about.

Investors will become more anxious about the economic outlook as Congress comes closer to the “X-date” when the federal government will no longer be able to pay its obligations. The most protracted debt ceiling confrontation in 2011 resulted in an unprecedented downgrade of the U.S. government’s credit rating, which shook markets and increased borrowing rates.

The debt ceiling, which has entirely failed to achieve its primary goal of containing US budget deficits, is another issue that House Republicans are considering reforming.

The debt ceiling is now statutorily established at $31.4 trillion, although Congress may occasionally suspend it so that it does not apply for a predetermined amount of time. Now, according to House Republicans, they are considering indexing the cap to GDP.