McCarthy urges Biden to start debt talks, Democrats say he has no plan

Republican U.S. House Speaker Kevin McCarthy urged President Joe Biden on Tuesday to begin budget talks to raise the U.S. government's borrowing limit, as Democrats pressed him to provide specific spending-cut proposals.

In a letter to Biden, McCarthy proposed scaling back domestic spending, clawing back unspent COVID-19 relief funds and other changes that he said would save trillions of dollars. But his Republicans have not yet produced a budget plan of their own and could be weeks or months away from doing so.

The top Republican in the House of Representatives told CNBC that he was prepared to lay out $4 trillion in spending cuts for Biden, if he would agree to meet.

Democrats said Republicans need to first unite behind a proposal.

"It's time for them to put out a budget," White House spokesperson Karine Jean-Pierre said in a statement.

Biden, a Democrat, has insisted that Republicans who control the House instead raise the $31.4 trillion debt ceiling without conditions and produce a fiscal 2024 spending plan before he will engage in talks about spending.

"Your position - if maintained - could prevent America from meeting its obligations and hold dire ramifications for the entire nation," McCarthy said in the letter.

The political standoff, which has taken hold since Biden and McCarthy held an initial meeting in early February, has raised concerns in the financial markets about a possible U.S. debt default that could cripple the economy.

Republicans have sought to blame Biden, but only Congress has the authority to raise the debt ceiling.

"The only thing missing is a real plan," Democratic Senate Majority Leader Chuck Schumer said in a floor speech.