The clock is ticking on a potential default on the nation's debt, with lawmakers nowhere near a compromise and the state of the U.S. economy at stake.
Meanwhile, House Speaker Kevin McCarthy says Republicans have a plan to raise the debt ceiling and save the nation from default — on the condition of capping federal spending.
Speaking at the New York Stock Exchange Monday, McCarthy said Democrats have no deal on the table unless they're willing to limit future spending increases.
"[A] no-strings-attached debt limit increase will not pass," he said. "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, curve our high inflation, all without touching social security and Medicare."
What is the debt ceiling? How defaulting could affect Americans
If Congress doesn't raise the debt ceiling, everyday Americans could see their jobs or benefits affected.
Speaker McCarthy appeared confident that he'll be able to get the more moderate flank of his caucus and the hard-line Republicans on board, and held a closed door meeting Tuesday morning to try and garner support.
McCarthy's proposed cuts would cap domestic non-defense spending and end certain COVID-19 relief programs, while reclaiming unspent funds. It would also implement certain work requirements for social security programs and freeze the federal budget at 1% growth for ten years.
Democrats are forcefully pushing back on McCarthy's proposal, saying he's holding the nation's economy hostage just to kick the debt ceiling vote down the road another year.
"Speaker McCarthy went all the way to Wall Street and gave us no new information at all — just political grandstanding," Senate Majority Leader Chuck Schumer said on Twitter. "If he continues in this direction, we are headed to default."
On Jan. 19, the U.S. hit the limit on how much money it can borrow, prompting the Treasury Department to initiate what it refers to as "extraordinary measures" to avoid a default.
Defaulting on its bills is something the U.S. government has never done, but if it does, it would lead to catastrophic economic consequences.
The White House and President Biden have insisted on a "clean debt ceiling" vote without budget cuts, but it remains to be seen if lawmakers on Capitol Hill will be able to reach an agreement before the U.S. reaches its debt ceiling limit sometime between July and September of this year.
