WASHINGTON (Reuters) -Republican U.S. House Speaker Kevin McCarthy urged President Joe Biden on Tuesday to begin budget talks to raise the U.S. government’s borrowing limit, as Democrats pressed him to provide specific spending-cut proposals.
In a letter to Biden, McCarthy proposed scaling back domestic spending, clawing back unspent COVID-19 relief funds and other changes that he said would save trillions of dollars. But his Republicans have not yet produced a budget plan of their own and could be weeks or months away from doing so.
The top Republican in the House of Representatives told CNBC that he was prepared to lay out $4 trillion in spending cuts for Biden, if he would agree to meet.
McCarthy’s proposals, though lacking detail, paralleled the demands of hard-right House Republicans far more closely than ideas put forward by moderate Republicans.
Democrats said Republicans need to first unite behind a proposal.
“It’s time for them to put out a budget,” White House spokesperson Karine Jean-Pierre said in a statement.
Biden, a Democrat, has insisted that Republicans who control the House instead raise the $31.4 trillion debt ceiling without conditions and produce a fiscal 2024 spending plan before he will engage in talks about spending.
“Your position – if maintained – could prevent America from meeting its obligations and hold dire ramifications for the entire nation,” McCarthy said in the letter.
The political standoff, which has taken hold since Biden and McCarthy held an initial meeting in early February, has raised concerns in the financial markets about a possible U.S. debt default that could cripple the economy.
Republicans have sought to blame Biden, but only Congress has the authority to raise the debt ceiling.
“The only thing missing is a real plan,” Democratic Senate Majority Leader Chuck Schumer said in a floor speech.
Members of the hardline House Freedom Caucus said McCarthy’s letter paralleled their own spending proposals and claimed it showed adherence to a closed-door agreement with conservatives that allowed him to become speaker in January.
“Today’s letter from the speaker to the president represents Speaker McCarthy’s fidelity to that agreement,” said Representative Matt Gaetz, one of 20 hardliners who forced McCarthy to endure 15 floor votes before being elected speaker.
The House Freedom Caucus has called for cutting nondefense discretionary spending to pre-pandemic levels and allowing it to return only to fiscal 2022 levels after a decade. McCarthy said he wanted to reduce “excessive” nondefense spending to “pre-inflation” levels with limited “out-year” growth.
Both also called for reclaiming unspent COVID-19 funds, imposing work requirements on social programs for the poor, and deregulating the energy sector.
The approach is a far cry from proposals offered by moderate Republicans, who have called for holding government spending in line with inflation, tying the debt ceiling to national output or raising it without conditions.
(Reporting by David Morgan; additional reporting by Richard Cowan and Susan Heavey; editing by Andy Sullivan and Jonathan Oatis)
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