Splits erupt as US House Republicans demand Biden negotiate debt limit

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By David Morgan

WASHINGTON (Reuters) – Republicans who control the US House of Representatives are divided on how tough a stance should be taken on the debt ceiling, but were united on Wednesday in demanding that Democratic President Joe Biden agree to negotiate spending as part of of every deal.

Hardline Republican conservatives, who have the power to block any deal in the narrowly divided House, want to impose sweeping budget cuts on Biden and the Democrat-led Senate in exchange for a deal to avoid default on the $31.4 trillion debt.

Some moderates want to be more cautious and avoid potential damage to the US economy, but even they argue their party will not support a debt deal without spending negotiations.

“I know we can’t ask for the moon,” said Representative Don Bacon, a moderate Republican whose Nebraska Biden district won by 6 percentage points in 2020.

“But the president can’t refuse to negotiate either. I mean, if he refuses to negotiate, you’re not going to get Republican support for anything,” Bacon told Reuters.

The federal government came close to its $31.4 trillion in borrowing limit set by Congress on Jan. 19, and the Treasury Department has warned it may not be able to pay all of the government’s bills until early June, when the largest economy in the world world risks defaulting on its obligations, including with regard to its debt securities.

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Brinkmanship could send investors into panic, potentially causing markets to collapse and the global economy to falter. A reduction in the United States’ debt could be the result, as happened in the protracted debt-ceiling battle in 2011, which also led to years of forced domestic and military austerity.

Congress raised the debt limit three times during Republican Donald Trump’s presidency. But Republicans are now leveraging the issue in their first major act since winning a narrow 222-212 majority in the House.

House Speaker Kevin McCarthy and Biden are expected to meet and discuss the debt ceiling, among other things. But no meeting has been scheduled yet. The White House has repeatedly rejected the idea of ​​negotiating spending levels to reach a debt ceiling deal.

SENATE STANDS BACK

Senate Republican leader Mitch McConnell, who has played an integral role in previous debt talks, predicted that any solution would have to come from McCarthy and Biden, saying the Republican-controlled House was unlikely to find a solution to the debt crisis. the Democrat-led Senate would accept.

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“The point everyone is making is that the White House has to negotiate with the speaker. They can’t just bypass the House of Representatives,” said Republican Rep. Mike Lawler, whose New York district Biden won by 10 points.

“There has to be a serious understanding that we need to curb spending,” Lawler told reporters.

Pressure for a deal is already mounting, with Treasury Secretary Janet Yellen calling for swift action from Congress.

“When it comes to the debt limit, the debt ceiling, the president has been very clear, I’ve been very clear, you’ve heard about that from our economics team — how this should be done with no strings attached,” White House spokesman Karine said. said Jean Pierre.

McCarthy is expected to open all negotiations by demanding that discretionary funding be returned to 2022 levels to achieve a balanced federal budget over the next decade.

But Republican hardliners, who used McCarthy’s stormy election as speaker to make concessions that weakened his position, have begun calling for deeper cuts in nondefense spending in anticipation of talks.

“We can spend at defense spending levels for the ’23 omnibus. We can return to pre-COVID spending levels for the rest of the bureaucratic state, and you can get to levels that are better than ’22,” Representative Chip Roy, a leading conservative, told reporters.

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But moderates say Republicans need to take a different tack to find a deal that can get through the Senate and be signed by Biden.

“You’re not going to get this stuff through the Senate, so let’s face it,” Bacon said.

He suggested keeping spending in line with inflation instead. “It’s reasonable. It’s not draconian. It bends the curve in the right direction,” Bacon said.

Another moderate, Representative Brian Fitzpatrick, is calling for a bipartisan proposal that would change the country’s borrowing limit from a fixed dollar amount to a percentage of national economic output.

Rep. Chris Stewart, a Utah conservative, described both tough and moderate proposals as opening salvos that would eventually lead to a deal with Biden.

“When we go into details about someone more right-wing or some moderates, there can be disagreement. But that’s why we’re negotiating and trying to determine where the middle ground is,” Stewart told Reuters.

(Reporting by David Morgan; additional reporting by Jason Lange; editing by Scott Malone and Jonathan Oatis)

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