(Bloomberg) -- President Joe Biden lashed out at Republicans and said they were looking to use the nation’s credit as leverage in economic negotiations.

Newly empowered House Republicans are aiming to capture the attention of voters with a flurry of proposals that would reshape the US economy. Biden, expected to run for re-election in 2024, is defending his legislative record.

“I will not let anyone use the full faith and credit of the United States as a bargaining chip,” Biden said at an event with union workers in Springfield, Virginia. “In the United States of America, we pay our debts.” 

He and the opposition are locked in a standoff over raising the nation’s debt ceiling. If unresolved, the conflict could unleash economic catastrophe around the world with markets working on the assumption that a compromise will be reached even if it’s at the 11th hour, as was the case in 2011.

Republicans are seeking to extract spending cuts, including on Social Security and Medicare benefits, in exchange for raising the borrowing cap. Biden has said the debt ceiling is not up for negotiation and has urged House Speaker Kevin McCarthy to raise it without any conditions.

These are the battle lines that have been drawn, with no one willing to make concessions and both sides looking to build up their case. 

Biden touted a report earlier in the day that showed the US economy grew faster than forecast at the end of 2022.

“We’re moving in the right direction,” Biden said. “Now we’ve got to protect those gains that our policies have generated, protect them from the MAGA Republicans in the House of Representatives,” he added, a reference to former President Donald Trump’s “Make America Great Again” slogan.

Gross domestic product increased at a 2.9% annualized rate in the final three months of the year. But there are also signs of slowing underlying demand as interest-rate hikes still threaten growth. Personal consumption rose at a below-forecast 2.1% pace.

Read more: US Economy Shows Slowdown Signs After Growing 2.9% Last Quarter

The president views the Republican agenda as the biggest threat to economic progress, according to a White House official, and Biden will be going on the offensive to highlight the impact GOP policies will have on working families. 

“They want to raise your gas prices. They want to cut taxes for billionaires who pay virtually only 3% of their income now,” said Biden. And, he added, Republicans wanted to impose a national sales tax that would hit consumers “on everything from food, clothing, school supplies, housing, cars - the whole deal.”

“I will not let that happen, not on my watch,” Biden said. 

The state of the economy will be a centerpiece of Biden’s expected reelection bid and the White House has seized on the lowest jobless rate in 50 years as a vindication of his economic record. Data also show inflation, a persistent political liability for Biden, cooling. Still, despite solid job growth, layoffs in some industries, including technology and banking, where companies are seeking to lower costs and boost profits, have rattled workers.

The fight over the debt limit poses another threat to the economy. The White House has said Biden will sit down with McCarthy but has insisted he will not negotiate with the California Republican on raising the debt limit.

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