Republican Speaker of the House Kevin McCarthy warned investors on Wall Street that the debt limit standoff between the GOP and the White House is something that could worry them.
When asked about the growing unease among traders on Wall Street, McCarthy didn’t say how the stalemate could be solved but said, “They should be concerned.”
“Because I sat down with the president on February 1, and the president never wants to meet,” fumed the speaker. “That’s interesting… I’m very concerned about the debt ceiling. I want to make sure we don’t have conflict.”
Senate Democrats and President Biden are refusing to enter into negotiations that Republicans could agree to an increase in the debt ceiling in exchange for an agreement by Dems to support cuts in federal spending. Instead, Democrats say Congress should have no pre-conditions before raising the debt ceiling, and maintaining spending cuts should remain a separate discussion.
If there is no action by summer, the government wouldn’t have access to the money needed to fund current obligations and will default on its debt for the first time in history.
A recent Goldman Sachs report projects that while a debt limit deal could eventually be found, the uncertainty is likely to have a negative impact on the financial markets in the upcoming months.
Goldman Sachs report: Uncertainty for financial markets if forced to delay payments
“The political standoff over raising the U.S. federal debt limit will likely be resolved before the government is forced to delay scheduled payments — but is still likely to create uncertainty for financial markets if history is repeated,” said the report.
Until now, Biden and McCarthy have only had one in-person meeting at the White House to discuss federal spending and the debt limit. Since then, the White House has said it opposes linking the two issues.
According to reports, Republicans plan on continuing to work on spending bills that make cuts to the government that Congress can support. They hope that work puts additional pressure on the White House to agree to a broader deal, including the debt ceiling and cuts.
The GOP believes the blame will increasingly fall on President Biden if the House passes spending bills using the normal process of committee work while Senate Democrats and Biden stand on the sidelines, according to a GOP aide.
“We’re never going to move a bill that just raises the debt ceiling, said McCarthy during an on-camera interview on the sidelines of his meeting with the President of Taiwan, Tsai Ing-Wen. “I’ve been very clear with the [U.S.] president.”