Former House Speaker Newt Gingrich (R-Ga.) told Fox News’ Sean Hannity on Monday that current Speaker Kevin McCarthy (R-Calif.) should stay the course in demanding spending cuts before agreeing to raise the country’s debt ceiling.
Earlier this month, the GOP-controlled House voted to pass a measure that did just that – raises the limit but also requires spending cuts that President Joe Biden and his Democratic Party do not want. Gingrich told Hannity that McCarthy should stick to the measure because if the country is allowed to default it’ll be on Biden.
“In my new book, ‘March to the Majority,’ I outline how we did it, and Kevin is following the same game plan — pass the bill, stand firm, be reasonable, but don’t back up. I think if you look at today’s meeting, you look at what has been happening, inch by inch gradually, the Biden team has come to recognize if there is a default, it is going to go down in history as the Biden default. It is going to end his presidential campaign for 2024, and it is unacceptable,” he said. “So he is going to have to get somewhere.”
“Kevin McCarthy, the speaker, has done a great job so far of setting a series of goals that the conservatives really want and are refusing to back off the core of those goals,” Gingrich added, according to Breitbart News. “Is it going to be 100 percent of what they passed out of the House? No, it never was for us, either. Is it going to be 80 percent? Probably. And I believe, first of all, that the June 1 deadline is not anything like the crisis. I have watched the Treasury for over 30 years. They can find a way to keep things going for a while.
“Second, I think that it is very, very important that Speaker McCarthy is such a dramatic contrast with [former] Speaker [Nancy] Pelosi (D-Calif.),” he added. “Remember, she once said you have to vote for it to find out what is in it. He is saying no matter what the pressures are. The House is going to have 72 hours. We’re going to have an argument. It is going to work out, and I think that’s a huge step in the right direction. I feel reasonably good after today’s meeting that they are moving in the right direction, and Speaker McCarthy holding his ground, being reasonable, being pleasant but being firm is the right direction.”
The debt ceiling, also known as the debt limit, is a statutory limit set by the U.S. Congress on the total amount of debt that the federal government can legally borrow. It serves as a mechanism to control the government’s borrowing and ensure fiscal responsibility.
When the federal government spends more money than it collects in revenue, it relies on borrowing to cover the shortfall. This results in the accumulation of national debt. The debt ceiling acts as a cap on this debt, requiring congressional approval for any increase in borrowing beyond the established limit.
If the debt ceiling is reached, it creates a dilemma for the government. It must either reduce spending, increase revenue, or take measures to temporarily suspend or raise the debt limit. Failure to take appropriate action could result in a default on existing financial obligations, which could have severe consequences for the U.S. economy and financial markets.
To address the debt ceiling, the Treasury Department can implement “extraordinary measures” to create additional borrowing capacity temporarily. These measures involve adjusting the timing of certain government expenditures and temporarily suspending the issuance of certain types of debt. However, these actions provide only temporary relief and are not a long-term solution.
The debt ceiling has implications for financial markets and the economy. Uncertainty surrounding the debt ceiling can lead to increased market volatility and a loss of confidence in the U.S. government’s ability to manage its finances. Credit ratings agencies closely monitor developments related to the debt ceiling and may downgrade the U.S. credit rating if they perceive a heightened risk of default.
If Biden refuses to budge and the country defaults, he won’t have anyone to blame but himself.