US House Speaker Kevin McCarthy has unveiled his proposal to raise the debt ceiling. Accordingly, the increase in the debt limit must go hand in hand with a reduction in government spending, the Republican said in parliament yesterday.
The state budget must return to the level of 2022, from where expenditure should increase by no more than one percent per year. For example, inflation would be reduced. He also called for massive cuts in US President Joe Biden’s investment and climate protection program. Biden said yesterday in a speech in the state of Maryland that McCarthy’s plans would primarily disadvantage socially disadvantaged Americans.
McCarthy’s proposal heralded the next round in the dispute over raising the debt ceiling. The Republican accused Biden of ignoring the “debt crisis” and called on the president to negotiate to avoid a default. Biden said he was ready to talk about a draft budget. However, the Democrats under Biden have long demanded that the debt limit be raised independently of budget negotiations.
In the USA, Congress sets a debt ceiling at irregular intervals and thus determines how much money the state can borrow. The limit so far is around 31.4 trillion US dollars (around 29 trillion euros). In the meantime, the applicable debt ceiling has been reached in the USA and the Treasury Department has to make reallocations, among other things, so that the government can pay its bills. If there is no agreement, a default could be imminent between July and September, according to the independent budget office of the US Congress.