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Sunday, June 23, 2024

McCarthy Says Debt Deal Will Require Spending Cuts

'You have to spend less than you did last year. That's not that difficult to do, but in Washington, somehow, that is a problem... '

(By Brett Rowland, The Center Square) U.S. House Speaker Kevin McCarthy, R-Calif., said Wednesday that the White House must agree to spending cuts as part of a debt deal.

“You have to spend less than you did last year,” McCarthy said at a news conference. “That’s not that difficult to do, but in Washington, somehow, that is a problem.”

McCarthy said he was hopeful negotiators would make progress although he described the two sides as “far apart.”

“I’m sending our negotiation team down to the White House to try to finish up the negotiations with the White House,” McCarthy said. “There are a number of places where we’re still far apart.”

The debt ceiling is the maximum amount of debt the U.S. Department of the Treasury can issue. U.S. Treasury Secretary Janet Yellen has repeatedly said lawmakers must raise the debt ceiling by June 1 or risk a default on U.S. debt obligations, but when exactly U.S. coffers will run dry remains uncertain. In a letter to McCarthy on Monday Yellen again said the money could run out as early as June 1.

“With an additional week of information now available, I am writing to note that we estimate that it is highly likely that Treasury will no longer be able to satisfy all of the government’s obligations if Congress has not acted to raise or suspend the debt limit by early June, and potentially as early as June 1,” she wrote.

She noted that things could change: “These estimates are based on currently available data, and federal receipts, outlays, and debt could vary from these estimates. I will continue to update Congress as more information becomes available.”

House Republicans passed a bill to reduce spending by $4.8 trillion and increase the debt limit by about $1.5 trillion, or until March 31, 2024, whichever comes first. The Republican bill would strip energy and environmental tax credits from the Inflation Reduction Act and formally block Biden’s student loan cancellation. It also would put work requirements in place for some federal social programs, such as requiring Medicaid recipients to work 80 hours per month.

The Limit, Save, Grow Act would return total discretionary spending to the fiscal year 2022 level in fiscal year 2024 and cap annual growth at 1% for 10 years, according to the Committee for a Responsible Federal Budget. The Congressional Budget Office has estimated that the measure would reduce budget deficits “by about $4.8 trillion over the 2023–2033 period.”

President Joe Biden has said that any agreement must have support from both parties.

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