Kevin McCarthy tells Biden time is running out to negotiate spending cuts to raise the debt ceiling — even as Republicans have yet to put forth a concrete plan

• House Speaker Kevin McCarthy sent a letter to President Joe Biden saying it's time to tackle the debt ceiling.
• The US faces a potentially disastrous default in just a few months, and the GOP wants major spending cuts.

As the US inches closer to a default on its debt, Kevin McCarthy has some stern words for the president on how to avoid that outcome.

On Tuesday, the Republican speaker of the House sent a letter to President Joe Biden urging him to negotiate spending cuts to raise the debt ceiling. McCarthy and Biden met to discuss the topic in February, but since then, Biden has remained adamant that raising the debt ceiling, and keeping the US on top of paying its bills, should be a clean — and bipartisan — deal.

McCarthy and his colleagues disagree. They have vowed to use raising the debt ceiling as leverage to achieve their own priorities, like major spending cuts, and they want Biden to come to the bargaining table before the country defaults. The White House did not immediately respond to Insider's request for comment on the letter.

"With each passing day, I am incredibly concerned that you are putting an already fragile economy in jeopardy by insisting upon your extreme position of refusing to negotiate any meaningful changes to out-of-control government spending alongside an increase of the debt limit," McCarthy wrote in his letter.

"Your position—if maintained—could prevent America from meeting its obligations and hold dire ramifications for the entire nation," he continued.

Democrats are still waiting for a concrete plan from Republicans on what exactly they want to cut to raise the debt ceiling.

"It's time for Republicans to stop playing games, pass a clean debt ceiling bill, and quit threatening our economic recovery," Press Secretary Karine Jean-Pierre said in a statement. "The President welcomes a separate conversation about our nation's fiscal future. Earlier this month, he released a budget that cuts the deficit by nearly $3 trillion while lowering costs for families and investing in America. Speaker McCarthy and his extreme MAGA caucus have refused to put out a budget."

Republicans have floated using debt prioritization — where the government would prioritize what payments they would make or not make should default come — as one route to avert a widespread crisis. But Treasury Secretary Janet Yellen has said that approach is just default by a different name.

"What's critical is that we maintain our commitment to pay the government's bills — all the government's bills — when they come due," Yellen said at a House Ways and Means committee meeting. "And if we don't do that and think that there is some shortcut around it that will avoid economic chaos, we're kidding ourselves — because not paying the government's bills will produce economic and financial collapse."

The conservative House Freedom Caucus has also put forth a plan to raise the debt ceiling only if Congress passes legislation to, among other things, block student-debt relief and cut spending for environmental programs. The White House attacked components of the plan last week.

A report last week from the Joint Economic Committee detailed the range of consequences for Americans should the US default on its debt. For example, the report said Americans could lose $20,000 in retirement savings, new homeowners could see their monthly mortgages increase $150 a month, and private student-loan borrowers could experience a $23 monthly increase to their payments.

A Moody's analysis found that even enacting the GOP's spending cuts to avert a crisis could cost the economy 2.6 million jobs, and lead to a recession in 2024. A short default would lead to 1 million jobs lost, and a recession by the end of the year; a longer one means 7 million Americans out of work.

"Mr. President, simply put: you are on the clock," McCarthy wrote. "It's time to drop the partisanship, roll up our sleeves, and find common ground on this urgent challenge. Please have your team reach out to mine by the end of this week to set a date for our next meeting."