Discussion about the debt limit was nearly absent when Federal Reserve Chairman Jerome Powell joined the Republican Study Committee’s (RSC) weekly lunch on Capitol Hill Wednesday.
Members of the largest conservative caucus in the House said as they left the lunch that Powell mostly fielded questions about inflation, interest rates and the health of banks in the aftermath of the Silicon Valley Bank collapse.
“[Powell] just said it’s important that debts matter; deficits matter; for us to work collectively to get our spending to be at or below our revenue growth,” Republican Study Committee Chair Kevin Hern (R-Okla.) said after the meeting.
Hern added that there was no message from Powell expressing concern about the fallout from a default.
“We’re gonna pay our debts. I think it’s obvious that when you are the currency of the world, you cannot not pay your debt holders. That would be a prescription for disaster,” Hern said.
The lack of focus on the debt limit comes as Speaker Kevin McCarthy (R-Calif.) is trying to pull President Biden to the negotiating table to secure spending cuts and policy concessions as a condition of voting to raise the debt limit. Biden, meanwhile, has called on Congress to pass a “clean” debt ceiling increase without strings attached.
Each leader has accused the other of inching toward financial catastrophe in the event of a default or last-minute action. The debt limit is expected to be reached sometime this summer.
The lack of focus on the debt ceiling from Powell is notable given his comments on the topic nearly two months ago.
“No one should assume that the Fed can protect the economy from the consequences of failing to act in a timely manner,” Powell said in February.
“There is only one way forward here, and that is for Congress to raise the debt ceiling, so that the United States government can pay all of its obligations.”
The Fed chairman declined to speak to reporters after the RSC meeting on Wednesday.
According to a source in the room, Powell said multiple times: “We’re committed to bringing inflation down with as little damage as possible.”
House Majority Leader Steve Scalise (R-La.) asked about protecting community banks in the aftermath of the Silicon Valley Bank collapse, according to the source, and Powell said that there is no need to panic, no need to cause bank runs, that things are calming down and depositors need to be reassured that their deposits are safe.
“That requires careful thought on the part of legislators,” Powell said, according to the source.