Biden warns of economic ‘chaos’ proposed by ‘MAGA Republicans’

By Maegan Vazquez, Kevin Liptak and Betsy Klein, CNN

President Joe Biden spoke at a union hall in northern Virginia Thursday afternoon, attempting to cast himself as a defender of the middle class by leaning into his economic accomplishments and contrasting them with the Republican proposals he says would be catastrophic for Americans’ pocketbooks.

“We’re moving in the right direction. Now we’ve got to protect those gains … that our policies have generated, protect them from the MAGA Republicans in the House of Representatives who are threatening to destroy this progress,” Biden said.

As Washington has been gearing up for a standoff over the debt ceiling and the potential for a global economic fallout later this year, the speech gave Biden a chance to turn the focus away from news of the discovery of classified documents in unsecured areas in his home and office. The unfolding story has been a magnet of Republican scrutiny and press attention. But in his speech to union workers in Springfield — a Virginia suburb just outside Washington, D.C. — Biden offered a preview of his potential reelection messaging strategy, turning focus back to what the White House really wants to be talking about.

In his remarks, Biden contrasted his administration’s work with Republicans’ plans to cut entitlement programs and impose a 30% national sales tax. He also discussed progress on wage growth and unemployment, as well as key legislation, such as the CHIPS Act and the bipartisan infrastructure law.

“Here’s the deal: they want to cut your Social Security and Medicare … beyond that they’re actually threatening to have us default on the American debt,” the president said.

“I have a rhetorical question: (Why) in God’s name would Americans give up the progress we’ve made for the chaos they’re suggesting? I don’t get it. That’s why the MAGA Republicans are literally choosing to inflict this pain on the American people. Why?” Biden asked. “I will not let it happen. Not on my watch. I will veto everything they send.”

The president said he’s willing to work with Republicans “on real solutions and continue to grow manufacturing jobs and build the strongest economy in the world and make sure Americans are paid a fair wage.” But he added that he “will not let anyone use the full faith and credit of the United States as a bargaining chip.”

Biden also announced an “Invest in America” Cabinet, which will be charged “with ensuring that his economic plan is generating private sector investment and continues to drive our economic progress for years ahead,” according to an administration official.

The group will include Commerce Secretary Gina Raimondo, Labor Secretary Marty Walsh, Transportation Secretary Pete Buttigieg, Treasury Secretary Janet Yellen, Health and Human Services Secretary Xavier Becerra, EPA Administrator Michael Regan, Infrastructure Coordinator Mitch Landrieu and senior adviser John Podesta.

Biden also celebrated newly released data showing the US economy grew more than expected in the final quarter of last year, registering solid growth to end 2022 even as consumers and businesses battled inflation and historically high interest rates.

Gross domestic product — the broadest measure of economic activity — increased at an annualized rate of 2.9% from October to December last year, according to Commerce Department data released Thursday. For 2022, GDP expanded 2.1%, the report showed.

GOP legislative proposals to cut Social Security and Medicare have yet to formally materialize, but House Republicans have reportedly been considering leveraging cuts to the programs in the debt ceiling fight, according to the Washington Post.

Although a plan hasn’t been formalized, the White House has already blasted congressional Republicans this week for suggesting the cuts to offset the deficit as part of negotiations over raising the nation’s debt limit.

White House spokesperson Andrew Bates argued in a statement earlier this week that “under the guise of ‘fiscal responsibility,’ (Republicans) want to cut the benefits that middle class Americans pay for throughout their working lives, but they also want to enlarge the deficit with new tax giveaways for the wealthiest Americans. This is nothing more than an extreme plot to sell out middle class families to rich special interests at any cost.”

Within the first week of the new Congress, a dozen House Republicans introduced a bill that would abolish the IRS altogether and replace the entire federal tax code with a national sales tax.

While that legislation is unlikely to become law given that the Democrats maintain a majority in the Senate, Biden and Democrats see an opening to criticize the GOP for fringe proposals they say would harm the American economy.

The national sales tax could leave low- and middle-income people worse off and would likely lower tax revenue. One estimate found that a tax rate of about 30% would more likely be able to generate the same amount of revenue — or 44%, if measured the way state sales taxes are typically presented.

The White House and Biden have, of course, sharply criticized the proposal.

The president on Thursday suggested the proposal was an effort to give the wealthy another tax break.

“Who do you think is going to get ripped off?” Biden asked. “They want to raise taxes on working and middle class people in America by passing a national sales tax, taxing every items from groceries, gasoline, clothing, supplies, medicine.”

The president also acknowledged reports that House Speaker Kevin McCarthy may not be in favor of the tax.

In a statement following the president’s meeting this week with Democratic congressional leadership, the White House highlighted that they discussed the “continued stepped-up implementation of groundbreaking laws like the Inflation Reduction Act, the CHIPS and Science Act, and the Bipartisan Infrastructure Law.” The statement also emphasized “the importance of building on the historic economic progress,” such as low unemployment, expanding health care coverage and making gains to stabilize inflation.

In the statement, the White House said the group “agreed on continuing to work across the aisle … while also being honest about disagreements — like our opposition to an unprecedented middle class tax hike, inflation-worsening tax cuts for the rich, abortion bans, or cutting Social Security and Medicare.”

The latest Bureau of Labor Statistics’ quarterly Employment Cost Index showed that although employers continued hiking wages to attract workers and retain existing staff during the third quarter, their raises did not keep up with inflation.

Wages and salaries for civilian workers increased by 1.3% in the third quarter and 5.1% over the year ending in September, according to the data, which was released last October.

The next release of the Employment Cost Index is scheduled to be released on Tuesday.

This story has been updated with additional reporting.

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CNN’s Katie Lobosco, Tami Luhby and Alicia Wallace contributed to this report.