President Joe Biden and Republican leader Speaker Kevin McCarthy fought Wednesday for the moral high ground at the start of an epic battle over the national debt limit that will determine the fate of the US economy and set the stage for the 2024 election.

Biden called Republican plans "wacko" and McCarthy said Biden was "bumbling" into a US debt default. But both leaders also claimed to be presenting the most responsible plans to exit the impasse and protect the world's largest economy.

Raising the borrowing limit is usually an annual formality in Congress to prevent the government running out of money and defaulting on the US national debt -- which would trigger economic upheaval at home and around the world.

However, with the party's right-wing faction in control of the slim Republican majority in the House of Representatives, McCarthy is leading an effort to turn what would ordinarily be just an accounting maneuver into hard political leverage.

Addressing Congress, McCarthy introduced a proposed law that would allow the annual debt increase in return for the kind of substantial spending cuts demanded by the MAGA branch of the party, loyal to former president and 2024 candidate Donald Trump.

This, McCarthy said, will "limit government spending, save taxpayers money, grow the economy."

Biden's choice, he said, is to "come to the table and stop playing partisan political games or cover his ears, refuse to negotiate and risk bumbling his way into the first default in our nation's history."

But in a speech to union workers in Maryland, Biden painted Republicans as the party of the wealthy and said McCarthy was holding the economy hostage by demanding politically motivated budget cuts in return for extending the debt ceiling.

Any talks on shrinking US debt should happen separately to the current debt limit extension, he said.

"They say we're going to default unless I agree to all these wacko notions of theirs," Biden said. "Take default off the table and let's have a real serious conversation."

- Tax day -


Biden, 80, has not yet formally declared his re-election bid. However, despite concerns over his age he is expected to launch the campaign soon.

The vision of what the White House calls a "blue collar blueprint" will be central.

In his lengthy speech, Biden said his policies favor the working and middle class.

He pointed to his legislative wins during his first term in office, including a massive federal infrastructure spending bill that he said has already launched 25,000 projects, and includes a "made in America" rule for all products used.

"When we rebuild America, and I mean literally rebuild America, we're gonna buy American," he said to applause.

Biden is also taking the unusual political path of proudly embracing taxes as part of the wider social cohesion that he says Republicans have broken down.

He told the union representatives that while they paid their full taxes, huge corporations enjoyed tax breaks passed by Republicans and many of the country's most wealthy found ways to pay very little.

MAGA Republicans, he said, are "pushing for more tax giveaways that overwhelming benefits the wealthiest Americans and biggest corporations."

Biden illustrated his point on Tuesday -- the deadline for all Americans to declare their 2022 income details -- by publicly releasing his own tax return, which showed he and his wife First Lady Jill Biden paid a federal tax rate of 23.8 percent.

Republican National Committee chairwoman Ronna McDaniel mocked Biden's message, saying the tax deadline is "the "Democrats' favorite holiday."