America's Talking - McCarthy Says Debt Deal Will Require Spending Cuts

Episode Date: May 26, 2023

U.S. House Speaker Kevin McCarthy 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." Support this podcast: https://podcasters.spotify.com/pod/show/america-in-focus/support Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Greetings and welcome to America in Focus, powered by the Center Square. I am Dan McAulb, executive editor of the Center Square Newswire Service. Joining me again today is the Center Square Washington, D.C. Bureau Chief Casey Harper. The feud between President Joe Biden and congressional Republicans continued this week on a couple of different fronts. First, the U.S. House essentially passed legislation, blocking President Biden's student loan forgiveness program. And then Speaker McCarthy, essentially said that there will be no debt ceiling limit raised without spending cuts, something that Biden is opposed to. Where do you want to start on this? We can start. I'm sure that all of our, all those with student debt are curious about what this means. And they've been hearing about the debt ceiling for a little while now.

So we can start with that. So House Republicans voted 218 to 203 using the Congressional Review Act, which is a provision that allows members of, allows Congress to overturn recently enacted federal rules. So they voted to do this. And what it does is two things. It cancels Biden's kind of unilateral action via the Department of Education to cancel $10,000 in federal student loan debt, more for Pell Grant recipients, up to $20,000 for Pell Grant recipients. And it also would restart repayment. So those who have, you know, sizable student loan debt know that they haven't been, you know, repaying on their debt. It's been paused. Now, that was done by,

former President Donald Trump and then extended multiple times by, you know, President Biden. The pause on repaying student loan debt comes stems from the COVID-19 pandemic, right? Yeah. I mean, that was kind of the justification for it. Now, there is kind of some political gamesmanship happening there because I think at some level Biden was looking for an excuse in the same way that you could argue that Trump, Trump's Title 42 action, which kept, you know, more, it made it easier for Border Patrol to turn away illegal immigrants. at the border. You know, Trump said, oh, this is because of COVID. But, you know, you could say, well, he's just using COVID to stop, you know, illegal immigration. Same thing with Biden here.

He could be using COVID to put in a politically popular for his base student loan forgiveness plan. The same way he tried to do an eviction moratorium, right? But the Supreme Court said it wasn't, it was unconstitutional. And it's worth noting that the Supreme Court is, you know, in the coming weeks going to release a decision on this, on this Supreme Court, on this student loan forgiveness. Now, that doesn't make Congress's efforts futile because the Supreme Court could very easily rule, hey, you know, we're not going to make a decision on this. That's an option they have. They can also say what he did is partially unconstitutional. Or they could just say it's totally unconstitutional for the president to unilaterally do this, which would put it back in the hands of Congress. Now, even though

the House voted this, you know, of course, there's a question of its support in the Senate, but even then it would need Biden's signature. So as of now, this congressional effort to overturn student loan cancellation is not going to be what gets it done very likely, but it does put a lot of pressure on Democrats. And they could even, you know, it helps them Republicans politically say they did something. And it could force Biden to actually veto and double down on, on this student loan, kind of controversial student loan plan. Ultimately, this is in the U.S. Supreme Court's hands. And we could get a decision on this almost any week now, right, from the Supreme Court. I'm talking about it. Correct. Correct. The Supreme Court has been issuing

decisions. This is the season for that. They did take up the challenge to President Biden's student loan forgiveness plan. So we'll see in the coming weeks, and listeners can look out for that at the Center Square.com. So let's get into this briefly. Casey, don't have a ton of time, this debt limit battle between House Republicans and President Biden. Treasury Secretary, Janet Yellen, says the U.S. could default on its debt as early as June 1st, which is next week, if Congress does not raise the debt ceiling, McCarthy and congressional Republicans say, yeah, we'll do that, but we need spending cuts before we agree to do that. President Biden is against that, saying they're two separate things and they should be handled separately, but the debt is about government spending. So there's a good argument to say that they should be tied together.

What happens next, Casey? Yeah, I mean, what happens next is somebody caves in, right? And the question is, who is more at risk politically for a default or who's able, who has more willingness to, you know, have, I guess a backbone. Maybe that's not the right word. But, you know, if we do default, will House Republicans get blamed in their own mind because they stood up? You could say that. But, you know, you could also make the argument, hey, Democrats have control of the Senate and the White House, whichever party really is in charge in D.C. should take the blame, especially whoever's in the White House. And then, but I really do genuinely believe neither party

wants to default because it would have really catastrophic consequences for the U.S. economy with ripple effects globally. I mean, so there is a really, there's a lot at stake here. I think that eventually they will get a deal done, but it's a little bit of game of chicken on both sides. And there's also, you mentioned that June 1st deadline, but it's further complicated by the fact that that June 1st choice is a little bit arbitrary. It's almost impossible for bureaucrats to determine the exact moment or day when we will run out of money and be able to pay our creditors. So it could be June 2nd. It could be June 3rd. And the Treasury Department has admitted as much that as early as June 1st, but potentially a couple weeks, you know, a few weeks after that. So how do you play a game of chicken with billions of dollars on the line, the credit of the U.S.? And you don't even have an exact moment where that's such a hard deadline that it's pretty interesting to watch with sadly pretty high stakes. With Memorial Day weekend coming up, I don't know if there are any, I'm sure the two sides are keeping in touch with each other. I don't know if there's any.

serious face-to-face talks planned through this weekend, but it's going to be June 1st before you know it. As you said, that still is an arbitrary quote-unquote deadline. Who knows? But it is a standoff that still continues as the days tick by. Yeah, that's right. And we'll see. I think this is, you know, McCarthy has had, I will probably wrap up with this, I guess, but, you know, McCarthy has been put to the test a couple times. You may remember that he was just barely elected to lead the house, but he's had some wins. He's taken on this student loan stuff. He passed his own version of a debt ceiling hike that significantly cut federal spending a few weeks ago and put the ball in Biden's court. So how he handles this has big implications for him and who's going to lead the Republican Party as well. Well, we will close on that, Casey, because we are out of time. Listeners can keep up with this story and more at the center square.com. Or Casey Harper, I'm Dan McAulip. Please subscribe. And thank you for listening.