House passes GOP's debt limit plan

The clock is ticking faster on the nation’s debt ceiling drama.

House Speaker Kevin McCarthy pushed his package to raise the debt ceiling by $1.5 trillion through the House in a close vote on Wednesday. But the White House continues to say that it will not negotiate on the issue.

The federal government could default as soon as early June.

That wouldn’t give House Republicans and the White House a lot of time to work out a deal to avoid a default, especially since negotiations have been at a standstill for several months.

The US hit its debt ceiling in January, triggering the Treasury Department to start taking extraordinary measures to prevent a default.

Here’s what the debt ceiling is and what defaulting would mean.

What is the debt ceiling? Established by Congress, the debt ceiling is the maximum amount the federal government is able to borrow to finance obligations that lawmakers and presidents have already approved — since the government runs budget deficits and the revenue it collects is not sufficient. Increasing the cap does not authorize new spending commitments.

The debt ceiling, which currently stands at $31.4 trillion, was created more than a century ago and has been modified more than 100 times since World War II.

Though it was originally designed to make it easier for the federal government to borrow, the limit has become a way for Congress to restrict the growth of borrowing — turning it into a political football in recent decades.

What happens if the US does default on its debt? Once the extraordinary measures and cash on hand are exhausted, the debt ceiling crisis would start having very real impacts.

The Treasury Department would likely have to temporarily delay payments or default on some of its commitments, potentially affecting interest and principal payments on US debt, Social Security payments, veterans’ benefits and federal employees’ salaries, among other obligations.

But no one knows exactly how the Treasury would handle the situation since it has never happened.

A default would also wreak havoc on the US economy and the global financial markets, as well as shake confidence in the safety of the Treasury market and raise borrowing costs.

Even the threat of one in 2011 caused the only credit rating downgrade in the nation’s history.

Read more about the debt ceiling here.

The Biden administration reiterated its stance that House Republicans must raise the debt limit without conditions, hours after the House passed a debt limit plan Wednesday in a symbolic win for Republican leadership.

"We are not a deadbeat nation. As President Reagan said: 'The United States has a special responsibility to itself and the world to meet its obligations. It means we have a well-earned reputation for reliability and credibility — two things that set us apart in much of the world.' We pay our bills. Congressional Republicans must do that again now and act to avoid default," White House press secretary Karine Jean-Pierre said in a statement

She said the United States has never defaulted on its debt or not paid bills.

"Congressional Republicans must act immediately and without conditions to avoid default and ensure that the full faith and credit of the United States is not put at risk," the statement said.

The GOP measure is dead on arrival in the Democratic-led Senate but is primarily aimed at boosting Republicans' efforts to negotiate with Democrats as the country approaches its default deadline as soon as this summer.

Republican Rep. Tim Burchett, one of four members who voted “no” on Speaker Kevin McCarthy’s debt limit package, said that he had made the GOP leadership aware early on that he would not support the bill.

“I gave my word early and I told them where I was at. I went to meetings and I expressed my opinion more than once. And honestly, the only meeting where I'd asked for some questions and answers, they didn't show up,” he told said, referring to how McCarthy did not come to their meeting Tuesday.

He said he was told about the last-minute changes to the debt bill package Wednesday morning. Burchett said he feels like he should have been notified about any additions at the meeting Tuesday.

“I hated going against my friends. I love Kevin McCarthy. I think he's a great leader. He's kept his word, you know, but I didn’t get asked," he said.

Ken Buck, Andy Biggs and Matt Gaetz were the others that voted against the bill. McCarthy could only afford to lose four votes and prevail on the vote. 

President Joe Biden will not negotiate with House Speaker Kevin McCarthy on the debt limit because it would hold the American economy hostage, a senior advisor said Wednesday.

The president was willing to talk to McCarthy about his vision for America, to discuss the budget and spending, Mitch Landrieu told CNN's Wolf Blitzer.

But he added:

"He will not negotiate about throwing the American economy off of a cliff on the issue of a debt limit. Now, this is not really a very complicated issue. When President (Ronald) Reagan was in office, when President (Donald) Trump was in office, raising the debt limit was not really a matter of holding the economy hostage – and the president's position is we cannot do that again because it's too dangerous."

"What the speaker of the House did today, with a very slim majority, is really risky and really terrible," Landrieu said.

House Speaker Kevin McCarthy called on the Senate and President Joe Biden to take action of their own after GOP lawmakers in his chamber passed a debt limit measure Wednesday evening.

"The president can no longer put this economy in jeopardy. We lifted the debt limit. We've sent it to the Senate. We've done our job — the only body in here that has done theirs," he added.

McCarthy urged Majority Leader Sen. Chuck Schumer to put their own plan on the floor and said that the president could no longer ignore it by not negotiating.

Some context: Biden reiterated Wednesday that he would not meet with McCarthy on extending the debt limit, saying it’s “not negotiable.”

“They haven’t figured out the debt limit yet,” Biden told reporters in the Rose Garden, referring to House Republicans. “I’m happy to meet with McCarthy, but not on whether or not the debt limit gets extended. That’s not negotiable.”

The House has voted to pass a debt ceiling bill after days of wrangling wayward Republican members from both ends of the conference.

Throughout the day, House Republicans rallied around their proposal to raise the nation’s borrowing limit and slash federal spending after leadership made a flurry of last-minute changes designed to win over key GOP holdouts – a major reversal after leadership insisted they would not alter the bill text.

The final vote was 217-215, with four Republicans – Ken Buck, Andy Biggs, Tim Burchett and Matt Gaetz — voting against the bill. McCarthy could only lose four votes and prevail on the vote. 

The bill is dead on arrival in the Senate, where Senate Majority Leader Chuck Schumer has said on multiple occasions that he will not consider the bill.

What's in the bill: The package raises the nation’s $31.4 trillion debt limit by an additional $1.5 trillion. But the plan also states that if the new debt limit is not breached by March 31, 2024, then Congress must again increase the borrowing authority by that date, proposing to reignite a major fiscal battle in the middle of a presidential election year.

The “Limit, Save, Grow Act” implements sizable cuts to domestic programs and intends to spare the Pentagon’s budget, returning funding for federal agencies to 2022 levels while aiming to limit the growth in spending to 1% per year. The nonpartisan Congressional Budget Office said that the bill would trim government deficits by $4.8 trillion over 10 years.

The 320-page bill also blocks Biden’s plan to grant student loan forgiveness, repeal green energy tax credits and kill new Internal Revenue Service funding enacted as part of the Inflation Reduction Act.

CNN's Melanie Zanona, Kristin Wilson, Lauren Fox, Manu Raju and Haley Talbot contributed reporting to this post.

The House is now voting on final passage of the GOP debt limit measure.

Democratic Rep. Raja Krishnamoorthi said that the GOP debt limit bill is "not a serious bill. It's not a bipartisan bill in any way, shape, or form."

The lawmaker from Illinois, speaking to CNN's Wolf Blitzer ahead of the House vote, said that a clean increase should be passed instead.

"I think the American people want us to pass a clean increase in the debt limit. Just to make it very clear, an increase in the debt limit merely authorizes us to pay our old bills for goods and services that were already rendered in the past. That means that if we did not increase the debt limit, we would not pay our bills, and it would amount to a national dine-and-dash. That would be catastrophic for the full faith and credit of the dollar and nuke our economy," he said.

Some Democrats are calling on President Joe Biden to change his tune and agree to negotiate on the debt ceiling.

“Even if those talks are not productive, they’ve got to start finding areas that they might agree on,” he added. “So I’m hoping to see that the Speaker is going to send this bill to the Senate, it’s going to be dead, and then we’re going to have to start over and figure out how we are going to make sure we don’t go off the cliff."

House Republicans are expected to vote Wednesday evening on their proposal to raise the nation’s borrowing limit and slash federal spending.

Biden has urged the House to pass a clean debt-limit bill, without conditions, to avert a financial crisis. He has so far refused to negotiate with Speaker Kevin McCarthy about the debt limit.

One centrist Democrat, Abigail Spanberger of Virginia, would not say whether the White House should negotiate with McCarthy, but she made clear she was uneasy.

“I think it’s important that we do everything that we can do to avoid defaulting," she said. “I’ll let the White House speak for the conversations that they’ve had with the Speaker. The gamesmanship, the brinksmanship with the very health and stability and unwillingness to pay our debts, that’s just not what we should be doing.”