Biden accuses Republicans of holding economy hostage over US debt ceiling

White House and Republicans remain at odds with threat of debt default looming

President Joe Biden speaks on the debt limit at Westchester Community College in Valhalla, New York. AP
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US President Joe Biden on Wednesday accused Republicans of holding the economy hostage as he pressed Congress to quickly pass a resolution that would raise the nation's $31.4 trillion debt ceiling.

His remarks at Westchester Community College in Valhalla, New York, came a day after a high-level meeting with top politicians at the White House made little progress in debt-ceiling negotiations.

Wednesday's address gave Mr Biden the chance to pitch a clean debt-ceiling raise, although that is unlikely to happen in a Republican-controlled House of Representatives.

Failure to reach a deal could result in a debt default, plunging the US economy into a recession and causing greater damage to the global economy.

“This isn't just a theoretical debate going on in Washington. The decisions we make are going to have real impact on real people's lives,” Mr Biden said.

But with the threat of a debt default and ensuing chaos weeks away, Mr Biden has categorically rejected House Speaker Kevin McCarthy's $1.5 trillion increase last month, which includes a range of spending cuts

Republicans are "literally — not figuratively — holding the economy hostage by threatening to default on our nation's debt that we've already incurred", Mr Biden said.

The White House has largely singled out Mr McCarthy's proposal for cutting veteran access to health care and decreasing food security programmes such as Meals on Wheels.

What is the US debt ceiling?

What is the US debt ceiling?

Part of the proposal would rescind the unspent $5.2 trillion in Covid-19 funding that Congress passed in 2020 and 2021, which would affect veterans' access to healthcare and pension plans.

Mr Biden told reporters on Tuesday that he would “take a hard look at” rescinding some of the unspent Covid funds.

The plan also affects childless adults. Those aged 56 or younger without dependants must work at least 80 hours a month to take part in job training or community service, and to receive food stamps must show proof they are working 20 hours a week or are in a job-training programme.

Mr Biden called the meeting productive, but Mr McCarthy felt the two sides remained a long way from coming to an agreement.

“I didn't see any new movement,” Mr McCarthy said after Tuesday's meetingt.

He said Republicans in his caucus would not vote for proposal on raising the debt limit that did not include spending cuts.

Mr Biden is scheduled to meet again with the four leaders of Congress on Friday.

The Democratic president is scheduled to to travel to Japan, Australia and Papua New Guinea this month, which could interfere with crunch-time talks.

Mr Biden said postponing travel was possible but not likely.

Updated: May 11, 2023, 6:24 AM