Biden attacks Republicans over 'mind-boggling' debt ceiling threat

U.S. President Joe Biden delivers an economic speech at SteamFitters UA Local 602 in Springfield

By Steve Holland and Nandita Bose

WASHINGTON (Reuters) -President Joe Biden cast Republicans as representing the party of "chaos and catastrophe" on Thursday and sharply criticized their refusal to approve an increase in the U.S. debt ceiling unless they get a deal on spending cuts.

In an impassioned speech at a steamfitters union hall in Virginia, Biden launched attack after attack on Republicans who control the U.S. House of Representatives, saying some of their proposals are dangerous for the American economy.

House Speaker Kevin McCarthy, a Republican, has vowed not to approve a debt ceiling increase unless Biden and his fellow Democrats reach a negotiated deal with Republicans on cutting future government spending.

"We must finally address Washington’s irresponsible government spending if we want to put America on a better fiscal path," McCarthy wrote on Thursday.

Biden called McCarthy's position "mind-boggling."

“I will not let anyone use the full faith and credit of the United States as a bargaining chip. In the United States of America, we pay our debts," Biden said.

Of Republicans aligned with former President Donald Trump, Biden said: "They seem intent on being the party of chaos and catastrophe."

Republicans' threat is unusual - the U.S. debt ceiling has been increased on a bipartisan basis in Congress for decades, with the exception of a 2011 vote that included spending cuts for several years ahead.

Treasury Secretary Janet Yellen said on Jan. 19 that the United States has reached its current $31.4 trillion borrowing cap, but can continue paying its bills until June by shuffling money between various accounts. Investors have warned edging closer to that deadline could have dire market repercussions.

In his first major economic speech of the year, Biden also promoted his record on the U.S. economy, including the creation of more manufacturing jobs, a low unemployment rate and better-than-expected economic growth figures.

Biden addressed European leaders' complaint that his legislative package last year offers massive subsidies for U.S.-made products that they say will impact trade. He said he is getting criticism from abroad for focusing too much attention on the United States.

"The hell with that," he said.

Biden reiterated his threat to veto Republican proposals that would limit his authority to tap the strategic petroleum reserve, cut taxes on corporations and levy a national sales tax should they reach his desk.

Since Democrats control the Senate, his veto pen is unlikely to be needed, but Biden and the White House have lit on these and other fringe Republican proposals to highlight the gulf between the two parties' plans.

"They want to raise your gas prices. They want to cut taxes for billionaires," Biden said. "They want to impose a 30 percent national sales tax," he added.

Biden, who is laying the groundwork for a 2024 reelection bid, told union members in Springfield, Virginia, that he would veto any such bills. "Not on my watch, I will veto everything they send us," he said.

Biden also went after pharmaceutical companies for making huge profits using federal incentives for research and investment and promised to pass legislation extending a $35 cap on insulin for Medicare users to everyone.

The economy under Biden has been gripped by inflation that is now ebbing, as are fears that a recession is imminent. U.S. gross domestic product grew at a 2.9% annualized rate in last year's fourth quarter, exceeding expectations, the Commerce Department reported Thursday.

REPUBLICAN PROPOSALS

Since the new Congress started this month, the House has passed a bill to slash the Internal Revenue Service's budget, and some Republicans propose cutting Social Security and Medicare, retirement and healthcare spending programs for senior citizens.

"Do they think this is going to help with inflation," Biden said of the sales tax proposal. "What in God's name is this all about?"

As Biden started his speech, House Speaker McCarthy tweeted, "If President Biden is so eager to speak on the economy, then he should set a date to discuss a responsible debt ceiling increase."

A bill on the strategic petroleum reserve that the White House says will raise gas prices was another one of a series of political messaging measures that the House passed in its first week of business, and it is seen as having little to no chance of being taken up by the Senate.

The national sales tax proposal is included in the Fair Tax Act of 2023, introduced on Jan. 9 by Republican Representative Earl "Buddy" Carter of Georgia. It would replace the U.S. income, payroll, estate and gift taxes with a 23% sales tax and stop funding the Internal Revenue Service after 2027.

McCarthy responded "no" this week when asked by reporters if he supported the bill, which Georgia Republicans have been introducing without success since 1999.

(Reporting By Steve Holland and Nandita Bose; Additional reporting by David Morgan, Editing by Heather Timmons, Alistair Bell and Jonathan Oatis)