Biden promises no default and urges GOP to find common ground

(Bloomberg) — President Joe Biden vowed not to allow the U.S. to default and urged Congress to raise the debt ceiling and chastised Republicans trying to use the standoff to force spending cuts.

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Biden’s State of the Union address on Tuesday delved heavily into economic issues, striking a working-class tone as he called for higher taxes on billionaires and tax buybacks, new consumer protections and antitrust efforts, while urging Congress to break the partisan deadlock and take new action to adopt.

He cited the increase in the debt ceiling under his predecessor when he urged Republicans not to threaten a default as a condition of tax reform talks, which unfolded after a meeting between Biden and House Speaker Kevin McCarthy last week are at an early stage.

“They raised the debt ceiling three times with no preconditions or crisis. You paid America’s bills to prevent an economic catastrophe for our country. So tonight I challenge this Congress to follow suit,” Biden said. “Let us confess here tonight that the full confidence and credit of the United States of America will never be called into question.”

Biden entered the joint session to applause just after 9 p.m. in Washington and began speaking at 9:08 p.m. It generated a series of split-screen moments where Democrats and Vice President Kamala Harris stood and cheered while McCarthy and Republicans sat in silence.

The speech — also a de facto soft start to an expected re-election campaign — reiterated many familiar Biden themes, including a push to strengthen the middle class. In excerpts released Tuesday night, he urged Congress to come together despite partisan differences.

New Executive Measures

“To my Republican friends, if we were able to work together at the last convention, there’s no reason we can’t work together at this new convention.” The people sent us a clear message,” Biden will say in early parts of his speech, according to excerpts. “Fighting for the sake of fighting, power for the sake of power, conflict for the sake of conflict gets us nowhere.”

The White House signaled that the speech would include a number of new executive measures and a list of proposals to Congress, including increasing a tax on share buybacks, a minimum tax for billionaires, legislation banning targeted online advertising to children and teenagers, and a Antitrust Enforcement Act.

“The tax system isn’t fair — it’s not fair,” Biden said. “Let’s finish work. There’s more to do. We must reward value, not just wealth.”

Other guests invited by the government hinted at possible legislative pushes on abortion rights and a ban on assault weapons. All are unlikely to survive the current, divided Congress.

Biden hinted at his upcoming budget, which he will release next month, and said he will reduce the deficit by $2 trillion without specifying a timeframe. He also reiterated a promise that no proposed tax increases would affect people earning less than $400,000 a year.

Biden touted his achievements and victories in the last Democratic-controlled Congress at a time when polls suggest voters give him little credit for them. According to a Washington Post/ABC News poll conducted between Jan. 27 and Feb. 27, more than six in 10 Americans believe the president has not accomplished much in his first two years in office, even though Congress passes important legislation under Democratic control has. 1.

Biden fleetingly pointed to inflation, which has become a major headwind for him and has thrown the Federal Reserve into a cycle of interest rate hikes that could eventually trigger a recession. Biden struck an optimistic tone, signaling he is confident inflation is coming down.

“Unity Agenda”

“We are better positioned than any other country in the world. But we have work to do, but here at home inflation is coming down. Here at home, gas prices are down $1.50 a gallon from their peak. Food inflation is declining — not fast enough, but it’s declining,” he said.

Biden once fought with sneering Republicans after saying some of them favor cuts to Medicare and Social Security. McCarthy shook his head in silence while hot-headed Georgia Conservative Representative Marjorie Taylor Greene stood up and yelled over Biden, apparently shouting “liar” at him.

“So folks, we all seem to agree on this, Social Security and Medicare are off the books now, right?” he said. “We have unanimity.” McCarthy has said cuts to both programs are off the table, but some Republicans have called for reforms.

Despite occasional skirmishes, Biden reiterated his efforts toward the so-called “unity agenda” from the speech a year earlier, including efforts to curb opioid use and deaths. Biden will announce a diplomatic push to stem the flow of fentanyl, though it’s not clear if he will single out China, a source of materials used to make fentanyl.

Biden is navigating heightened tensions with the world’s second-biggest economy after the downing of a suspected Chinese surveillance balloon on Saturday.

Biden nodded his bid to expand the middle class and bipartisan victories, such as legislation to expand infrastructure spending and subsidize domestic semiconductor chip production. He will tailor his economic offering to smaller communities where large businesses have shut down.

“Maybe you’re watching at home. You remember the lost jobs. And you wonder if there’s any way you and your kids can get any further without moving away. I understand,” Biden said. “That’s why we’re building an economy where no one is left behind.”

Biden also called on Congress to enact immigration reform — or at least a scaled-down version.

“If we don’t pass my comprehensive immigration reform, at least I will pass my plan to provide equipment and officers to secure the border.” And a path to citizenship for dreamers, those with temporary status, farm workers, essential workers,” he said.

He also called for police reform, which was stalled in the last Congress by bringing up the death of Tire Nichols. During the speech, he recognized Nichols’ mother and stepfather, who were present. “Let’s come together and finish the work on police reform. Do something,” he said, aloud to prepared remarks.

Biden stressed that the Covid pandemic is largely lagging behind the US and touting job gains – which some analysts say is a headwind for the Federal Reserve’s efforts to ease inflation and could increase the chances of more rate hikes and a recession.

“We are the only country that has emerged from every crisis stronger than we entered it,” Biden said.

(Updates with the latest from the speech throughout)

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