House Speaker McCarthy Promises to Raise Debt Ceiling Only With Spending Cuts Transcript

This is actually my 100th day since being elected to speaker. It’s not the 100th day since we first went to Congress. I don’t know if you watched that speaker race. It took a few rounds. Anybody could get elected on one round, I think it’s something special to go 15, but it’s an honor to be able to have this position. I chose to be here because in so many ways, this place represents the best of the American economy. Fast-paced, future focused, and dynamic. For more than two centuries, this market has enabled dreams, changed lives for entrepreneurs and investors. It has helped turn ideas into reality generation after generation after generation, it pays pensions, funds education, builds hospitals, and it supports charities.

(01:04)
And it creates the incentive for solving challenges and then helps to make those solutions widely available, we can live better lives. It has an impact that is felt by every person in every community, in every corner of this country and every other country in the world wishes it had it too. Now, almost 40 years ago, president Reagan came here to talk about the economic revival that America was experiencing under his leadership. Before ringing the opening bell, Reagan said these words, “We’ve moved from malaise to hope, confidence, and opportunity. With that malaise for what it really was, government with his high taxes, excess spending, and overregulation had thrown a wrench in the works of our free markets.” In essence, government was trying to run the economy, but it was ruining it instead. Then he closed his speech with this warning about out of control spending.

(02:17)
“It’s time that government gets off its present spending spree before it squanders our future prosperity.” Reagan’s words echo throughout these halls as a warning for all of us today. We are seeing in real time the effects of reckless government spending, record inflation, and the hardship that it causes. Rising interest rates, supply chain shortages, instability in the banking system, and uncertainty across the board. Now, unlike President Biden, I don’t dismiss Americans’ fear about higher prices. I share them and I share their conviction that we must change course before it’s too late. That is why I’m here. Today, I speak to you not just as Speaker of the House, but as a father, as a former small business owner, as a taxpayer, as a proud American. I want to talk to you about the debate that is not happening in Washington, but should be happening over our national debt. It’s a debate that directly affects the lives of every single American. America deserves to hear the truth, so I’m going to start just with the facts. Our national debt is too high, far too high, and the problem is getting worse, not better. We are now $31 trillion in debt.

(04:12)
That’s more the entire economy of America, 20% more. Think for a moment that is unsustainable. Over the next 10 years, the United States will pay 10.5 trillion just in interest on our debt. Put that in perspective, since 1940 until today, we have paid 9 trillion of interest in our total debt over 83 years, 9 trillion, and now we’re going to pay 10.5 in 10. If our lifetimes, these interest payments are on track to crowd out and eventually eclipse the vital programs like Social Security and Medicare. Now, let me repeat. Far from protecting these vital programs, as the president says he will, President Biden’s extreme spending threatens to crush them with debt and economic decay. Without exaggeration, American debt is a ticking time bomb that will detonate unless we take serious responsible action. Yet, how is President Biden reacted to this issue? He has done nothing, so in my view, I think, and the rest of America, that’s irresponsible.

(05:47)
Rather than face the facts, this President has embraced a fantasy that debt doesn’t matter. That money can always be created out of thin air, and that the solution to higher prices caused by reckless spending is just higher taxes. In two short years, president Biden, along with the Democrats in Congress, have added 6 trillion to our national debt burden, which created inflation, made us more dependent on China and has undermined Medicare and social security. Today, it’s the American people who are left paying the price. Americans have received a pay cut for 24 consecutive months, the longest streak in American history as inflation has just persisted.

(06:46)
In fact, since President Biden took office, families have lost the equivalent of $7,400 worth of income. Nearly 6 in 10 Americans are living paycheck to paycheck, struggling to make ends meet. For young families, Biden’s inflation means home ownership is moving further and further away. For our seniors, Biden’s inflation means a lifetime of retirement savings are being ravaged. And now we see the collapse of the largest bank since the Great Recession. It’s a direct result of incompetent bank supervision and the negative effects of constantly fighting President Biden’s inflation.

(07:40)
It is basic economics that when Washington prints more and more money, prices go up and purchasing power comes down. As my favorite economist, Milton Friedman said it more than 50 years ago, “Inflation is made in Washington.” Yet, rather than working with Republicans to find a reasonable agreement to tame inflation, provide certainty to the economy, President Biden is demanding that Congress make room for new debt without a single sensible change to how government spends your hard-earned money. Not one change. My question to you today, does that sound responsible? Let me put it this way.

(08:40)
If you gave your child a credit card and they kept maxing it out to the limit, would you just blindly raise the limit? Of course not, one parent would do that. You’d be responsible for paying the bill, but you would sit down, you’d work with them to figure out how they could change their spending habits so it never happens again. That exact same thing is true for our national debt. Debt limit negotiations are an opportunity to examine our nation’s finances. Now, in the past 35 years, there has been eight major deficit reduction laws enacted by Congress. Every single one of them was attached to legislation that raised the debt limit, and every one of them was bipartisan. Why? Because the problem gets solved only when both parties come together.

(09:50)
Now, when he was Senator Joe Biden, he voted for spending reforms attached to debt limit increases four times in 1985, in 1987, in 1993, and in 1997. And on those other occasions when he opposed raising the debt limit, it was because he said the deficit reduction measures were not enough to justify debt limit increases. To quote Senator Biden, his opposition to raising the debt limit in 2004 was, “A protest of the policies that have brought us to this point and a demand that we change course.” What changed, Joe? As Vice President Biden led the talks on spending restraints in 2011, debt negotiations. During those negotiations, which we actually called the Biden Group, he passionately made the case for negotiating in good faith. To again,

Then Vice President Biden, he said, “You can’t governor without negotiating.” What changed Mr. President? I agree with the former sensible Joe Biden. He knew that our government is designed to find compromise. I just wish the current extreme Joe Biden would listen to the former Joe Biden too. I met with President Biden at the White House on February 1st, 75 days ago. During our meeting, I told the president clearly, let’s find a way to come to an agreement like we have before. Had the president agreed to negotiate in good faith, we’d already be done. Unfortunately, I have not heard from the White House since our very first meeting. President Biden has been missing in action and misleading the public. Mr. President, with all due respect, enough is enough. This is not how the leader of the free world should act. Your partisan political games are provoking the very crisis you claim to avoid. Greater dependency on China, increasing inflation and threatening Medicare and social security.

(12:40)
Even members of his own party think this approach is extreme. Democrat Senator Joe Mansion recently said, “Recent actions make clear to me that the Biden Administration is determined to pursue ideological agenda.” Senator Mansion is right. Make no mistake: the longer President Biden waits to be sensible, defined an agreement, the more likely it becomes that this administration will bumble into the first default in our nation’s history. Addressing the debt requires us to come together, find common ground, and reduce spending. Let me be clear. Defaulting on our debt is not an option, but neither is a future of higher taxes, higher interest rates, more dependency on China, an economy that doesn’t work for working Americans.

(13:52)
Let me be clear: a no strings attached debt limit increase will not pass, but since the president continues to hide, House Republicans will take action. Okay, so here’s our plan: in the coming weeks, the House will vote on a bill to lift the debt ceiling into the next year, save taxpayers trillions of dollars, make us less dependent upon China, curve our high inflation, all without touching social security and Medicare. Simply put, it puts it on a fiscal responsible path in three ways: it limits, it saves, and it grows. First, we’ll limit federal spending. In the past two years, discretionary spending in Washington has exploded by more than 17%. That’s faster than GDP growth or even inflation. And keep in mind, the new spending does not include the trillions of dollars of COVID area spending.

(15:07)
From 2011 to 2021, the federal government operated under spending caps. Though these caps were occasionally raised through debt limit negotiations, they were largely successful. Discretionary spending flatlined and overall spending growth slowed dramatically. Our legislation accomplishes the same goal by returning the federal government to 2022 levels and then limit the growth of spending over the next 10 years to 1% of annual growth. Now, don’t believe anyone who tells you these are Draconian limits. Think about it. They’re the same spending levels we had just four months ago. Just last October. Well, that’s seven months. And make sure that our veterans and our service members are taken care of.

(16:10)
But the bloated, overgrown bureaucracy that has expanded under President Biden needs to be pruned and that’s exactly what we’ll do. If Washington wants to spend more, it’ll have to come together to find savings elsewhere, just like every single American Household does every single day. This will restore discipline to Washington, the budgeting, and to help put an end to reckless spending cause inflation. Now second, we will save the taxpayer money on the unserious proposal. The budget the president made, he wants to spend more this year than government did during the height of the pandemic. Just think about that for one moment. He wants to spend more than we spent during the height of the pandemic. House Republicans actually believe the opposite should happen before we borrow another dime. We owe it to our children to save money everywhere. Our proposal will examine wasteful Washington spending and executive overreach in all forms. Among other items, it will claw back tens of billions of dollars in COVID-related money. You see, House Republicans have already passed a bill to end the pandemic officially and the President just signed it last week.

(17:48)
So now it’s time for Washington to return to normal. The American people are tired of politicians who use COVID as an excuse for more extreme inflationary spending. If the money was authorized to fight the pandemic but was not spent during the pandemic, it should not be spent after the pandemic is over. Now third, we will grow the economy so we stop being dependent on China. House Republicans already passed HR-1, the Lower the Energy Cost Act, and it had bipartisan support. Among other things, this bill restores American energy leadership, makes it easier to build things in America and makes us less dependent upon China, and it brings jobs back to America that will grow the economy. Our proposal will also restore work requirements that ensure abled body adults without dependents earn a paycheck and learn new skills. That will grow our economy and help the supply chain.

(19:03)
Right now, there are more job openings than people who are looking for jobs. You know why? It’s in part because the Biden Administration weakened work requirements. Incentives matter and the incentives today are out of whack. It’s time to get Americans back to work. Don’t believe anyone who says our plans hurt American’s social safety net. We’re a very generous nation. And when people fall on tough times, we’ll help them. That will not change. But this is important. Assistant programs are supposed to be temporary, not permanent, a hand up, not a handout, a bridge to independence, not a barrier. Just as Ronald Reagan understood the importance of economic growth, we should welcome and celebrate the benefits of strong, growing economy for with a strong growing economy, we will no longer be dependent upon China. We will no longer be victims to inflation, and we can protect and preserve social security and Medicare.

(20:21)
My fellow Americans, as we confront the consequences of President Biden’s extreme reckless spending, Congressional Republicans are ready to act and to lead. That is the resolve to the House Republican majority, every single one of them. It’s an honor to be in New York. I love this time of year. It’s the beginning of baseball season. We all know what one of the most famous Yankees, the Great Bambino, Babe Ruth. You know what he said? You just can’t beat the person who never gives up. Well, if there’s one thing I hope America has learned about me in the last 100 days in my race to become speaker: I will never give up. I’ll never give up on you. We will never give up on you. We will not rest until the economy is healthier, until our country is more confident, until our children’s future is brighter. We owe it to the American people to use this moment in history to deliver the future they want, they need, and they deserve. I have full confident that if we limit our federal spending, if we save the taxpayer money,

If we grow our economy, yes, we will end the dependence on China. We will curb inflation and we will protect social security and Medicare for the next generation and America will be stronger for it. If you agree, don’t sit back, join us. Joining us in demanding a reasonable negotiation, a responsible debt ceiling, an agreement that brings spending under control. And if President Biden decides to stop the partisan ways and stands with us, then a majority of us will join with him in common cause to address this urgent challenge.

(22:53)
You’ve been patient. You’ve been kind. You’ve listened to me tell you a story about what’s not happening in Washington. It’s no longer the time to be quiet. It’s no longer the time to be patient. Your job is you focus on markets every day. You know tomorrow will be better than today, but you also know businesses fail when their fiscal house is not in order. As citizens, you know our government does not have their fiscal house in order. It doesn’t matter what political stripe you stand or what part of the country you grew up in. You love this country, conceived in liberty and dedicate the proposition that we’re all equal.

(23:58)
You want your children to have a better future. You make sacrifices every day for them. You know one of the greatness of this country is our ability, the design of our government, that both sides come together. For 75 days, the President has ignored the debt ceiling. As Speaker of the House, I have a responsibility to tell the nation that that has got to stop.

(24:35)
This isn’t something to be played with. This isn’t something to put a political game with. I’m not predetermining what has to happen, but just as Reagan talked about a malaise of burdensome regulation, of inflation, of government trying to run the economy but ruining it, that is what we experienced today. I’m here to tell you, I want a responsible, sensible debt ceiling.

(25:10)
That’s puts us on an economic path to make America stronger. That works for every America, but that cannot happen if the President continues to ignore the problem and he can’t continue any longer. The day is coming. I do not want to see this president bumble in to a default. I want to sit down and solve the problem together. Thank you for the opportunity and God bless America.

Thank you very much, Mr. Speaker. And thank you for laying out your and your party’s plan to help ensure the long term, not only sustainability but prosperity of the US economy. And I think you can tell from the resounding applause, there is a group of leaders in here that’s very much focused on making sure that we are positioning our country for further greatness and that when we compete against the world, the United States will always win.

(26:33)
So thank you very much and thank you for agreeing to take a handful of questions before we head down to the trading floor and check in on the markets as well. But you mentioned inflation as an important concern that US policy makers have not yet fully addressed, yet alone remedied. And on the fiscal side, you made your and your party’s case for curbing spending to alleviate a lot of the pain that individuals and businesses have been feeling because of increasing prices.

(26:59)
Now that’s fiscal policy. Now on the monetary side, the complete other side of the coin, we have seen recent PPI prints and CPI prints show that inflation is moving in the right direction. The Fed has been cutting rates in an effort to, again, curb inflation and to some degree slow-

[inaudible 00:27:20] rates or raising rates?

I’m sorry. Raising rates. Raising rates to reduce inflation and to some degree curb economic growth as well. Do you feel the Fed is on the right track right now?

Well, first, let me say that the Fed is an independent entity.

Correct.

I quoted Milton Friedman, my favorite economist. He said, “Inflation only starts when government spends too much.” He also said the only way to curve inflation is the interest rates have to be higher than the inflation rate. So as an independent entity, had they acted earlier and gone to 3%, we wouldn’t be in the situation we’re in. But if we gone for a decade of cheap money, we also realize what we are doing. But if government continues to spin, they create the inflation to make Fed to have to act.

(28:09)
My role as a policymaker, first and foremost, cut back the created inflation to begin with. That’s the place that I serve. Curve back the wasteful spending. Think for a moment you added $6 trillion. The congressional budget office is the one who came out and said, we’ll pay 10.5 trillion just in interest. 83 years. We haven’t paid that much. We’re going to pay that in a 10-year window.

(28:34)
If you look at a 50-year average of what we normally spend per GDP, it’s around 21%. But we’ve been spending over 23 on our way to 25. If you look at revenues, a lot of people say, “Well, you should raise taxes.” On average, we normally bring about 17% of GDP in revenues. You know what we’re bringing in today? 20. Only 200 times in modern history have you brought in 20.

(28:58)
So it’s not a revenue problem. We’re bringing more money in a percentage than any time before, but we’re spending and there’s no curve on that. So the Feds, their own entity, they’re going to make their own decisions, but they’re having to make decisions based upon what we did to create inflation. So I have a responsibility to curve that so the Fed wouldn’t have to act. The one thing I would say about the Fed, focus on the things of why they were created, not things that they weren’t.

Yeah. Fair. So Mr. Speaker, obviously from today’s gathering and from your remarks, business leaders are becoming increasingly focused on the debt ceiling. And it’s not just talk, you’re seeing it in the markets as well. And if we look at some financial instruments that are commonly used to ensure against the government default, the prices of those instruments are increasing, and to some degree, the most commonly used instruments at their highest levels in over a decade. So since the last time we really faced this challenge.

(29:56)
In your and your party’s negotiations, and to the extent you have visibility into the administration’s plans, are you monitoring market conditions as you head into these negotiations?

Look, markets go up and down. Again, markets are reacting to work we’ve done. So I shouldn’t monitor you. I should monitor what we are doing. And that’s exactly what I do. The reason why the markets are going up, because the president’s ignored us for 75 days. Look, I went to see the president on February 1st, I sat with him. This is a guy who is a former senator who voted four times to raise the debt limit when they put something attached to it.

(30:35)
The only times he voted against the debt limit. He said when they didn’t do something enough to change the behavior. In 2011, it was his group that was named. It was his argument to say, “You can’t argue not to negotiate together. A whole government’s designed to find compromise.” When I walked with him and sat with him, I said, “Look, we couldn’t negotiate and there’s parameters.”

(30:59)
Let me be very clear. There’s two things I will not do. I will not raise taxes and I will not pass a clean debt ceiling. It just won’t pass. So why don’t we sit together and find ways to put us on a better path? Why don’t we spend less than we spent the year before? If we just go back seven months to 2022, is that really going to break us to October spending?

(31:24)
Then, think for a moment, the pandemic is over. You have billions of dollars that was appropriate, that was not used. They dormant for two years. Did you spend it now or bring it back and have savings? If you cap the future spending, but you allow for growth, you make elected officials actually make a decision on what’s wasteful and what’s not. They’ll prioritize the things we find important. And then, what about making our country grow again?

(31:59)
It’s very hard to build something in America, is it not? So in our bill HR1, we create permitting reform, cutting red tape. So it doesn’t matter what form of energy you love, maybe you just love wind and solar. You still can’t build it. What if you want to build the highway or the bridges? You wait on average seven years, it costs too much. How are we going to compete with other countries?

(32:21)
I think if we attach that to a debt ceiling growing our economy, that’s going to save us money in the long run. So let’s make it that. I know there’s a place we can come to an agreement, just hard when people think that there’s not $1 that you can cut out of government today. No one believes that.

Indeed. So Mr. Speaker, we recently witnessed two significant bank failures here in the United States focusing a lot of the attention from policy makers on our lending system. In your view, are the

The recent failures a result of poor management and poor oversight or a lack of regulation, and what steps can policy makers take to bring confidence to both depositors and investors?

I think at any time there’s any problem in any other topic, I want to gather all the information before elected officials act. The information that I gather right now, I think it’s some poor policy decision and supervision and it’s battling inflation. Would Silicon Valley Bank be in any trouble had they not banked about a hundred billion dollars and the interest rates go up and if they sell they had to come back. They were losing. It was interest rates, right? But had you been able to pick ahead of time and that was a policy of spending too much money in government. Now it’s a state bank. Does Gavin Newsom have some responsibility to oversee it? Why did they miss this provision? It’s a unique bank in [inaudible 00:33:57]. I think he actually banked there as well. So a supervision provision, just because you propose new laws, if you don’t oversee what are currently on the books, that’s a misstep and I think history will prove that to be true.

Interesting. Shifting gears maybe a bit… Earlier this month I would say we saw President Macron of France join with dozens of French business leaders on a trip to China, and they returned with business deals. Last week we saw President Lula of Brazil not only travel to China with dozens of Brazilian business leaders, but come back with deals, but also a unified opposition to US trade and foreign policy as well. In addition to getting our fiscal house in order, what can Congress and policy makers do to help ensure the long term competitiveness of the United States? Because what we’re seeing is many countries and marketplaces not looking to the US for those growth opportunities, but perhaps looking elsewhere.

Look, I think it’s a combination of economics and foreign policy, but we could take this current situation about the debt ceiling to actually solve part of that problem too. Because when I’m looking to solve the debt ceiling, when I say limit, save and grow, the grow portion. We all know it’s difficult in this nation to build anything. It’s difficult to work with the government. Public-private partnerships, you really got to want to do it to be able to make it happen. And then people will stream some other countries that makes it easier and make it more welcoming for where capital can be. Why don’t we take this current situation to sit down within both parties and not focus on party, but focus on country and say, what could come out of here that would make America stronger, make it easier to produce in America? And that would be cutting some red tape, cutting some of the burdensome regulations, making some common sense decisions.

(35:52)
And you can utilize the debt ceiling as the opportunity to do it and you can build with our allies. The other thing too is we should actually enhance the things that God has blessed this nation with. Look, it doesn’t matter what state you’re in anywhere in this country, we need to expand every form of energy we have, every form. From wind, from solar, to petroleum, to natural gas. But God has blessed us with this. So not only could we lower our energy costs, which will lower inflation, lower the cost of goods, let families keep more money in their pocket, but geopolitically we could make the world safer and environmentally we could lower global emissions. If we replaced Russian natural gas, just the amount that they have sold to Europe for one year, we would lower CO2 emissions by 218 million tons. American natural gas is 41% cleaner.

(36:52)
But also think about the lessons that we’ve learned from Ukraine. Dependency makes us weaker. When you’re looking to the future, we want to be less dependent on other countries, especially when it comes to China. We want to support our allies. Geopolitically we want to be stronger economically. All of that could be a beginning of a stepping stone of solving those problems by dealing with the debt ceiling. I mean, seriously, when I raised in the speech… So people understand a debt ceiling is your child having a credit card. They went out, they charged it up. You’re responsible for paying it. So yes, we’re going to pay our debt, but you just wouldn’t raise the limit. You’d say, why are you spending this? Every family does this. Why is the only place we’re not going to do this in our government? And it’s just not the fear of failing on the debt ceiling, it’s what’s happening in the world today.

(37:54)
We’re hearing our allies going over and visiting. President of France, Macron, the only foreign leader that President Biden has done a state dinner for. Went to see President Xi, came back and told Europe, “We should become less dependent upon America.” That’s our ally. And the other fear we all should have as Americans in studying history, the grouping and the growth of China, Russia, North Korea, and Iran, literally calling themselves an axis of power. We should not ignore that, the movement away from the dollar. But the one thing I will tell you, the only way the dollar does not, this fails become the world currency is not what China or other countries do, it’s what we do from within and spending too much money, putting ourselves in $31 trillion of debt is a greater threat than Brazil using the Yuan than the dollar.

(39:07)
And we solve our problems not looking other places, but looking within first. My speech today wasn’t to criticize and say one sides right the other side’s wrong. It was to tell the rest of this country that we’re about to hit a debt ceiling. I’ve been trying to come to an agreement, but the president doesn’t even want to talk. And our whole government is designed to find compromise. And we’ve got our rest of our allies looking different. We’ve got big problems. But I still believe this, the greatest nation in the world is here. The greatest form of government is here. And the way we can solve it is if we work together, not individually. That’s our solution.

Well, maybe one last question. Mr. Speaker. You mentioned in your speech today is your 100th day as speaker so congratulations. Congratulations for-

How many of you watched the speakers vote? Best reality TV, right?

15 rounds.

15 rounds.

15 rounds.

It’s a good boxing match.

That’s right.

Who won?

Never give up.

Well, what would you say you are most proud of in the first 100 days and what are you most excited about in the next 100 days and beyond?

Yeah, I never measure within 100 days, but there’s some really significant things we’ve done in 100 days. I don’t mind being underestimated. I think it’s better if I’m just hitting singles and doubles, I’ll score more runs. I’m now the speaker of the house. I’m not the Republican leader and I have responsibilities that may be a little different. I’m never going to solve big problems alone. We’ve got a lot of problems to solve. We have to come together. So it’s kind of like Jim Collins making that flywheel work. How do you bring Congress back together? I’m proud of the fact of the relationship I’ve built with Hakeem on the other side. I decided when I got elected, I’m going to treat him the way I wanted to be treated. I’m proud of the fact bipartisan we were able to create a select committee on China. I’m proud of the fact that within the hundred days we have passed more bills in the last Congress.

(41:25)
We have created a Parent’s Bill of Rights to have say in your kids’ education. We’ve passed. We’ve cut the 87 000 IRS agents out of the house. I think government should be here to work for you, not go after you. I’m proud of the fact that we stood up for law and order. It might just be in DC, but it sent a message across the world. I’m proud of the fact that H.R.1 was bipartisan. It’s the core of what we want to do economically, our energy policy of where to be. In this first hundred days I stood at the Reagan library, not with just members of my own party, but equal number of members on both sides of the aisle and we sat down and we met with the president of Taiwan. And when I looked to the future and the threats that are there, they were going to take action to make sure those threats don’t happen.

(42:20)
How can we deter something bad from happening? And you know what? I’m proud of the fact I haven’t had my head in the sand and said I would not talk to the president about the debt ceiling. I’m proud that we’re here today and having an honest conversation with the American public, not preconceived what has to be decided upon, but willing to sit down in good faith to find a sensible, rational, responsible way forward so America would be stronger. Look, 15 rounds were tough, but they made me stronger. It’s not a problem that we have debate. It shouldn’t be just uniform as we go through. And I think our discussion should argue on both sides, but at the end of the day we should find what unites us to make us stronger.

We completely agree, Mr. Speaker, and we want to thank you for joining us today. We know there are heavy demands on your time, but your message is important. It’s timely, it’s topical. So thank you for being with us. Thank you for your service to our great country. Please join me in giving a round of applause to Speaker McCarthy.

Thank you.