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McCarthy Proposes One-Year Debt Ceiling Increase Tied to Spending Cuts
Clashing with President Biden, who has called for raising the debt limit with no conditions, the Republican speaker went to Wall Street to pitch what he called a “responsible, sensible” solution.Speaker Kevin McCarthy said House Republicans would vote “in the coming weeks” on a measure that would lift the debt ceiling.Credit...Jeenah Moon for The New

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Clashing with President Biden, who has called for raising the debt limit with no conditions, the Republican speaker went to Wall Street to pitch what he called a “responsible, sensible” solution.

Sudan crisis Comet World News Speaker Kevin McCarthy talking at a lectern, which displays the logo of the New York Stock Exchange.
Speaker Kevin McCarthy said House Republicans would vote “in the coming weeks” on a measure that would lift the debt ceiling.Credit…Jeenah Moon for The New York Times

WASHINGTON — Speaker Kevin McCarthy on Monday proposed a one-year debt ceiling increase paired with a set of spending cuts and policy changes, backing down substantially from earlier demands but making clear that Republicans would not raise the borrowing limit to avert a catastrophic debt default without conditions.

In a speech delivered from the New York Stock Exchange, Mr. McCarthy said House Republicans would vote “in the coming weeks” on a measure that would lift the debt ceiling into the next year in exchange for freezing spending at last year’s levels while enacting stricter work requirements for social programs and a host of regulatory rollbacks. The plan, which would be dead on arrival in the Senate, would set the stage for yet another fiscal confrontation just as the presidential campaign hits a critical period.

“I’m not predetermining what has to happen,” Mr. McCarthy said in a speech that sought to cast President Biden, who has repeatedly called for a debt limit increase, as the person standing in the way. “I want a responsible, sensible debt ceiling that puts us on an economic path to make America stronger. It works for every American. But that cannot happen if the president continues to ignore the problem.”

“A no-strings-attached debt limit increase will not pass,” he said.

The debt limit is expected to be breached as early as July unless Congress acts to raise it.

The speech came as Republicans, plagued by internal divisions, toil to agree on a fiscal blueprint to accomplish their demand that any such increase be paired with substantial spending cuts. The outline Mr. McCarthy laid out was significantly narrower than the party’s stated objectives earlier this year that included balancing the budget in 10 years, an aspiration that he did not mention in the remarks.

It was unclear whether the ideas Mr. McCarthy spoke about on Monday could draw enough backing to pass with his party’s slim House majority. Asked in an interview on CNBC minutes after his speech if he had the support of his conference for the plan, Mr. McCarthy stopped short of saying so.

“I think I have the support of America,” he said. “I’ll get the party behind it.”

Mr. McCarthy is likely to struggle to pass any debt limit bill given Democratic opposition to the spending cuts. Some G.O.P. lawmakers routinely vote against raising the limit regardless of which party is in power, and he can afford only a handful of defections.

Democrats have said Mr. McCarthy’s inability to line up the votes for such a measure has effectively stalled budget discussions, since it has left it unclear what the party’s opening bid would be in any negotiation.

Mr. McCarthy’s decision to offer a potential solution publicly on Wall Street suggested that he was under growing pressure to produce a plan to calm jitters among investors about the grim outlook for a deal to avert a catastrophic default this summer. Yet he shrugged off such concerns on Monday during a question-and-answer session after his speech, saying, “Markets go up and down.”

The bill Mr. McCarthy says he is planning to put forward would freeze spending at last fiscal year’s levels, rescind tens of billions of dollars in unspent pandemic relief funds, enact stricter work requirements on food stamp and Medicaid recipients, expand domestic mining and fossil fuel production, and roll back federal regulations Republicans view as overly burdensome.

In a speech that was sprinkled with misleading statements and erroneous assertions, Mr. McCarthy sought to defend Republicans’ position on the debt ceiling and portray Mr. Biden’s insistence that the nation must not default on its debt as the irresponsible one.

Pitching the idea of tying the debt limit increase to new work requirements, Mr. McCarthy said it was time to get Americans “back to work,” implying that aid approved early in the Covid-19 pandemic has discouraged adults from working. But Labor Department statistics show that a larger share of Americans aged 25 to 54 — so-called prime-age workers — were in the labor force in March than in February 2020, on the eve of the pandemic.

It is also a measure that could rankle lawmakers in Mr. McCarthy’s conference facing tough re-election fights in swing districts, some of whom have chafed at calls for narrowing access to safety net programs.

Mr. McCarthy also strongly suggested that Mr. Biden had refused to speak with him about raising the debt limit since an initial meeting in February, saying, “I haven’t heard from the White House.” But his aides and Mr. Biden’s have spoken on the matter in the months since, according to White House and congressional officials.

Mr. Biden and his aides insist that Congress must raise the debt limit without conditions, but they say the president is open to separate discussions on the federal budget — once Mr. McCarthy produces a formal budget proposal. While they wait for Mr. McCarthy to make an offer, White House officials have criticized the budget cuts Republicans have floated, including the work requirements and proposed limits on domestic spending programs.

“A speech isn’t a plan, but it’s clear that extreme MAGA Republicans’ wish lists will impose devastating cuts on hardworking families, send manufacturing overseas, take health care and food assistance away from millions of people, and increase energy costs — all while adding trillions to the debt with tax cuts skewed to the superwealthy and corporations,” Andrew Bates, a White House spokesman, said on Monday.

At a news conference in Washington, Senator Chuck Schumer, Democrat of New York and the majority leader, was more blunt.

“If Speaker McCarthy continues in this direction,” he said, “we are headed to default.”