House Speaker Kevin McCarthy notched an enormous victory last night by passing a debt ceiling bill that would lift the federal borrowing allowance by $1.5 trillion over the next year in return for nearly $5 trillion of deficit reduction over the next ten years. This changes the political fiscal game completely.
Mr. McCarthy has turned the tables on President Biden. Why? Because Biden has been prattling on for weeks and months saying he won't negotiate until the House Republicans come up with a budget. Well, they just did and it's going to force Biden to the negotiating table sooner than he and his minions think, whether they like it or not.
Even Democrats in both Houses want a negotiation, even if they don't agree with the Speaker's bill. Really, in Washington, other than Chuck Schumer and Joe Biden, nearly everyone wants a negotiation to secure the credit-worthiness of the debt obligations of king dollar, the world's reserve currency and folks know that there are going to be budget savings attached to the debt bill.
That has happened eight times in the last 38 years: two Gramm-Rudman’s under Reagan, one more time under Papa Bush, three Clinton-Gingrich deals during the 90s and two deals during the Obama years. Now, before we get into more details, here's some Biden blarney that he's going to have to take back:
THE WHITE HOUSE, JANUARY 30: REPORTER: "What is your message to Speaker McCarthy?"
BIDEN: "Show me your budget and I’ll show you mine."
PHILADELPHIA, MARCH 9: "I want to make it clear: I’m ready to meet with the speaker anytime, tomorrow if he has his budget. Lay it down, tell me what you want to do. I’ll show you what I want to do. See what we can agree on, what we don’t agree on."
ACCOKEEK, MD, APRIL 19: "Take default off the table and let’s have a real serious, detailed conversation about how to grow the economy, lower costs and reduce the deficit"
Speaker McCarthy is going to be here in just a moment to comment on all of this, but it is remarkable that Biden has gone 85 days after his first meeting with Speaker McCarthy without a second date. 85 days and counting! No coffee. No Diet Coke. No drive-in movie. Nothing.
That is abomination, especially from a guy who used to sell himself as a uniter and a compromiser or specifically, the guy who negotiated a spending-cut debt deal with Republican Speaker John Boehner 12 years ago. Talk about hypocrisy. Talk about low politics. Talk about incapable of speaking the truth.
I don't think Biden & Co. took McCarthy & Co. seriously. I don't think Biden world ever expected the new GOP House to function, but they are dead wrong. Actually, Mr. McCarthy has put together two major bills.
Beside this debt limit deal, he also engineered H.R.1, the "Lower Energy Costs Act," that will reopen the fossil fuel spigots that are so important to reducing inflation and increasing growth. Today's GDP report, which showed barely 1% growth and 5% inflation, the worst of both worlds, continuing the stagflation that has robbed working folks throughout the country of real wages and living standards, should be a spur to Biden to get off his butt and do something to help the country for a change.
Instead of whining about "MAGA, MAGA, MAGA," he and his staff should get moving to generate the kind of limited government budget restraint that the House Republicans are proposing, along with a reopening of our economy-saving energy sector.
I'll end where I began. Speaker McCarthy's debt bill completely turns the tables on Joe Biden's phony, lazy stalling tactics. Right now, McCarthy is in the driver seat. What an interesting turn of events! Like I mentioned last night: Save America. Retire Biden-Harris.
This article is adapted from Larry Kudlow’s opening commentary on the April 27, 2023, edition of "Kudlow."