McCarthy Warns Biden Could 'Bumble' Into First Default In US History

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by Tyler Durden
Monday, Apr 17, 2023 - 04:00 PM

House Speaker Kevin McCarthy (R-CA) announced Monday that House Republicans are on course to pass their own debt ceiling bill which would allow the United States to meet its obligations until 2024.

"Since the president continues to hide, House Republicans will take action. So here’s our plan: In the coming weeks the House will vote on a bill to lift the debt ceiling into the next year, save taxpayers trillions of dollars, make us less dependent upon China, curb our high inflation — all without touching Social Security and Medicare," said McCarthy during a speech at the New York Stock Exchange.

And while he didn't offer specifics, McCarthy slammed Democrats over open-checkbook policies, while refusing to negotiate policy conditions for extending the debt limit.

"Let me be clear. A no-strings-attached debt limit increase will not pass,” McCarthy said, adding of the forthcoming GOP plan: “It limits, it saves and it grows," said McCarthy, who added that "the longer President Biden waits to be sensible to find an agreement, the more likely it becomes that this administration will bumble into the first default in our nation’s history," said McCarthy.

As we noted earlier Monday (available in full for premium subscribers), thanks to a notable spike in the US deficit (due to less tax revenue combined with far greater governmental outlays), the Treasury General Account, or the cash balance parked by the Treasury at the Fed, has dwindled rapidly and was in the double digits as of Friday - the lowest since the end of 2022 - and an amount which, sans a rapid debt ceiling solution, could lead to market chaos.

So is chaos eminent? Read more here...

"Without exaggeration, American debt is a ticking time bomb that will detonate unless we take serious, responsible action. Yet how has President Biden reacted to this issue? He has done nothing," said McCarthy, adding "Debt limit negotiations are an opportunity to examine our nation’s finances."

Any bill passed by the GOP-controlled House would of course need approval from the Democratic-led Senate, before heading to Biden's desk for his signature.

As far as the Treasury Department is concerned, lawmakers have until June to raise the debt limit, however other experts believe it could be extended until between July and September.

According to White House spokesman Andrew Bates, "There is one responsible solution to the debt limit: addressing it promptly, without brinksmanship or hostage-taking — as Republicans did three times in the last administration and as Presidents Trump and Reagan argued for in office."