US Republicans Demand $173 Trillion Cut in Fiscal Spending... Biden Calls It "Insane"

Standoff Intensifies Over Debt Ceiling Increase
WP Criticizes "Gambling with US Credit Amid Financial System Vulnerability"

Kevin McCarthy, Speaker of the House and a member of the U.S. Republican Party, demanded a $130 billion (approximately 173 trillion won) cut in discretionary spending next year as a condition for raising the debt ceiling under the Joe Biden administration. President Biden immediately responded by calling it a "crazy idea." The deadlock in negotiations between the White House and the Republicans over the debt ceiling issue has become more entrenched, and the confrontation between the two sides is expected to continue.

[Image source=Yonhap News]

On the 19th (local time), Speaker McCarthy unveiled the 2024 fiscal year budget bill, which includes raising the federal government debt ceiling by $1.5 trillion (approximately 1,991 trillion won) or extending it until March 31 next year.

The 320-page budget bill includes a plan to cut discretionary spending, which the government can use at its discretion, by $130 billion (approximately 173 trillion won) next year, returning it to 2022 levels. It contains numerous measures to reduce the Biden administration's key policy budgets. These include reducing the electric vehicle tax credit under the Inflation Reduction Act (IRA), withdrawing support for the Internal Revenue Service, and canceling student loan forgiveness. It also includes reclaiming unused COVID-19 relief funds.

Additionally, the plan limits the annual spending growth rate to 1% over the next 10 years. Through this, Speaker McCarthy stated that the government’s fiscal deficit could be reduced by $4.5 trillion (approximately 5,974 trillion won) over the next decade.

Speaker McCarthy criticized, saying, "The president is ignoring the debt crisis," and added, "President Biden can choose to stop partisan political games and return to the negotiating table, or he can plug his ears and refuse to negotiate, risking pushing the U.S. into a default crisis for the first time in history."

The U.S. federal government debt reached the statutory limit of $31.4 trillion (approximately 41,687 trillion won) in January. The U.S. Treasury is buying time with accounting special measures, but there are concerns that a default could occur as early as June. In response, the government is demanding an unconditional increase in the debt ceiling, while the Republicans are resisting, saying the limit cannot be raised without significant spending cuts.

President Biden strongly condemned McCarthy’s budget proposal immediately after its release during a speech in Maryland, saying, "They are holding the economy hostage for political reasons," and called it a "crazy idea."

However, even if this budget bill passes the Republican-controlled House, it is likely to be discarded in the Democrat-controlled Senate.

The U.S. daily newspaper The Washington Post (WP) pointed out, "(This budget bill) will increase the risk of default in the coming weeks, throwing markets and the economy into chaos," and criticized, "Gambling with the U.S. government's credit at a time when the financial system is fragile is madness." It further stated, "Negotiations require a reality check," and noted, "Republican House members have an obligation to raise the debt ceiling for spending previously approved by both parties. It is better to raise the debt ceiling and start negotiations for a sustainable budget over the next several years."

This content was produced with the assistance of AI translation services.