Biden: "Don't Use Economy as Hostage... Debt Ceiling Must Be Raised Unconditionally"

Amid growing concerns of a potential default as early as early June over the U.S. debt ceiling negotiations, President Joe Biden reaffirmed his determination to push through a debt limit increase without compromising with the Republican Party. He also warned that failing to raise the debt ceiling and leading to a default would inevitably have repercussions not only for the United States but also for the global economy.

In a speech on the 10th (local time) at Westchester Community College in Valhalla, New York, President Biden stated, "The Republican threats are dangerous and nonsensical," adding, "Now is not the time to put all of this at risk, threaten a recession, and weaken America's standing worldwide." He emphasized that the discussions surrounding the debt ceiling are "not a theoretical debate confined to Washington D.C. but a decision that will have real-world impacts," expressing concern about the global consequences.

[Image source=AP Yonhap News]

These remarks came after President Biden and House Speaker Kevin McCarthy, a Republican, failed to find a solution regarding the debt ceiling increase during their meeting the previous day. The U.S. exhausted its $31.4 trillion debt limit on January 31 and has been relying on special measures since then. However, the Republican Party, which holds the majority in the House, is opposing the Biden administration's request to raise the debt ceiling, making large-scale government spending cuts a precondition. Meanwhile, the White House and the Democratic Party insist that the debt ceiling is not negotiable and demand an unconditional increase.

President Biden criticized the "MAGA" Republicans?referring to the extremist faction within the Republican Party?who control the House and oppose raising the debt ceiling, accusing them of "holding the economy hostage." He also labeled the Republican-led debt ceiling bill passed by the House last month as the "default on America" bill. The bill proposes raising the national debt limit by $1.5 trillion as the Republicans demand, but offsets this by cutting climate change funds and reducing the 2024 federal budget to 2022 levels.

In response, President Biden argued that "(if the Republicans' proposed budget cuts are implemented) government policies important to millions of middle-class Americans, such as healthcare, education, safety, and veterans' affairs, will be severely impacted." He also raised his voice, stating that the increase in government debt was due to tax cuts for the wealthy and large corporations during President Donald Trump's tenure. He made it clear that "America is not a country that defaults on its debts. We pay our bills," emphasizing that default is not an option.

U.S. Treasury Secretary Janet Yellen has set June 1 as the X-day when cash reserves will be depleted. If the unprecedented default occurs, millions of job losses and financial market turmoil are expected. Experts particularly note that this debt ceiling standoff is happening at a time when the economy is vulnerable due to the Federal Reserve's aggressive tightening. Earlier this month, the White House Council of Economic Advisers released an economic damage scenario from a default, estimating that if it lasts more than three months, the stock market could plunge by 45% and up to 8.3 million jobs could be lost.

However, White House spokesperson Jean-Pierre described the talks between the President and congressional leaders yesterday as "a productive meeting on the path to prevent the United States from experiencing a default for the first time in history." She stated, "The President has set a budget to move the country forward. But the issue of default is Congress's responsibility," holding the Republicans accountable for opposing an unconditional debt ceiling increase.

President Biden is scheduled to meet again with congressional leaders on the 12th. After the previous day's meeting, he told reporters that he might even skip the upcoming Group of Seven (G7) summit in Hiroshima, Japan, from the 19th to the 21st, expressing his determination to resolve the debt ceiling issue. Following the U.S. Labor Department's announcement that the April Consumer Price Index (CPI) recorded the smallest increase in two years, President Biden stated in a release, "If House Republicans fail to prevent a default amid all this progress, it will pose the greatest threat to our economy."

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