WASHINGTON (Reuters) – U.S. House Speaker Kevin McCarthy on Wednesday plans to unveil a plan to raise the nation’s debt ceiling by $1.5 trillion, a source said, as Republicans dig in on a standoff with the White House over the government’s borrowing limit.
Republicans narrowly control the House of Representatives and on Monday McCarthy laid out a proposal that included cutting the federal budget to 2022 levels and capping spending growth at 1% per year in exchange for raising the $31.4 trillion limit.
The White House on Wednesday reiterated its position that Congress should raise the debt limit — a move necessary to pay for the costs of previously approved spending and tax cuts — without conditions, as it did three times under Democratic President Joe Biden’s Republican predecessor, Donald Trump.
The U.S. federal government has already reached its $31.4 trillion borrowing limit and by this summer is expected to hit a point where it will no longer be able to meet its financial obligations. Without action by the divided Congress, that would trigger a historic default that would shake the U.S. and world economies.
The source, who was briefed on McCarthy’s proposal but not allowed to speak publicly, said the speaker would propose a $1.5 trillion increase in the limit. That could cover the government’s needs until early next year, setting the stage for another debt ceiling fight in the final months of the 2024 presidential election campaign.
McCarthy leads a fractious caucus that holds a narrow 222-213 majority, including a sizeable contingent of hardline members who want sharp spending cuts and dismiss the risks of failure to act on the debt ceiling. So far House Republicans have not produced a proposed budget of their own, a move that Biden contends would be a necessary starting point for negotiations on spending.
Even if McCarthy’s proposal were to pass the House, it would be unlikely to find support in the Democratic-controlled Senate.
The White House last month proposed its own budget, which it said would cut the nation’s deficit by nearly $3 trillion over 10 years, though it relied on increases in taxes on businesses and the wealthy, rather than spending cuts, to do so.
The nonpartisan Congressional Budget Office last month laid out a range of options to address the debt, which showed that higher tax collections would have significantly more impact than spending cuts.
(Reporting by Richard Cowan; Editing by Scott Malone, Nick Macfie and Jonathan Oatis)
