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House Republicans are finalizing a proposal that would raise the debt ceiling for roughly one year while slashing federal spending and unwinding some of President Biden’s top priorities, including student debt cancellation, setting in motion an urgent scramble ahead of a key fiscal deadline.
The emerging plan is likely to falter in the Democratic-led Senate, and surely would receive a veto from Biden, who has called on GOP leaders to preserve the country’s ability to borrow without conditions. It isn’t even clear if House Speaker Kevin McCarthy (R-Calif.) has united his own, razor-thin majority around the approach, adding to the challenge lawmakers face as they return Monday from their recess — and race to avert a financial catastrophe that may be as little as seven weeks away.
The emerging GOP framework could raise the debt ceiling into 2024, covering roughly $2 trillion in spending, according to three people familiar with the matter, who spoke on the condition of anonymity to describe private conversations about a fluid process. In exchange, that proposal would reduce spending at federal health-care, education, science and labor agencies to levels adopted in the 2022 fiscal year, amounting potentially to a roughly $130 billion cut. Those agencies also would be subject to new spending caps, which would limit future budget increases to around 1 percent over the next decade, the sources said.
Republicans further hope to use the legislation to roll back Biden’s recent student debt cancellation plan, recover unspent coronavirus aid funds and advance legislation to pave the way for more oil and gas drilling. And GOP leaders hope to introduce new work requirements for low-income Americans who receive federal aid, including those enrolled in the food stamp and Medicaid health-insurance programs.
“If you don’t have money to pay for things, you don’t ask for an increase in the credit card,” said Rep. Scott Perry (R-Pa.), the leader of the far-right House Freedom Caucus, which has aggressively sought significant spending cuts. “We’re looking at a pretty robust rescissions package that will save us a fair amount of money.”
Even in conflict-prone Washington — where fiscal deadlines often loom until resolutions arrive at the 11th hour — the uncertainty has created a growing sense of panic. Biden and McCarthy still have no plans to meet, more than two months after their inaugural sit-down, prompting Republicans to try to force the issue by preparing a proposal on their own.
Many GOP lawmakers caution that their legislative work is unfinished, a reflection of the lingering schisms within the ideologically divided House Republican conference. Those tensions have been on public display in recent weeks, as reports surfaced about new infighting involving McCarthy and his own leadership team. And any GOP bill is all but guaranteed to fail in the Senate, where Democratic leaders have called for an increase in the debt ceiling without conditions.
Still, Republicans seek to present a united front. McCarthy plans to lay out his party’s position Monday in a speech at the New York Stock Exchange, an address that aims in part to calm jittery markets. Privately, two of his top deputies — including Rep. Tom Emmer (R-Minn.), the majority whip — have been canvassing GOP lawmakers to gauge early support, which one source described as “overwhelmingly positive.”
“The sooner the better,” said GOP Rep. Vern Buchanan (Fla.), a top member of the tax-focused Ways and Means Committee, adding that a proposal would allow Republicans to “get this process going.”
Biden administration warns of ‘damaging’ effects from GOP budget plans
For now, the clock is ticking. The country could face the prospect of default as soon as June 5, according to Treasury Secretary Janet L. Yellen, whose letter to Congress about the limit in January officially touched off a fierce debate in which she has repeatedly called for swift action. Repeatedly, she has warned that a failure to raise the country’s borrowing cap could carry immense economic repercussions.
“I consider it essential that Congress come together to recognize that raising the debt ceiling is their responsibility to protect the full faith and credit of the United States,” she said at a Senate hearing last month.
The exact debt ceiling deadline — known in Washington as the “x-date” — may not come until as late as September, according to other federal indicators. The government is expected to offer greater clarity about its finances in the coming weeks, once it can assess its revenue after the end of tax filing season on April 18. In the meantime, federal spending has accelerated: The deficit in March reached $378 billion, nearly double the $185 billion over the same period in 2022 on an unadjusted basis, the Treasury Department reported Wednesday.
GOP eyes new work requirements for millions on Medicaid, food stamps
With a potential crisis approaching, McCarthy issued a letter to Biden at the end of March spelling out his party’s broad demands: Deep spending cuts, a clawback of unspent coronavirus aid, new work requirements on welfare recipients and a slew of policy proposals, including easier permitting for oil and gas drilling. GOP leaders came to the approach after months of listening sessions with their various factions convened by top lawmakers including Emmer.
Days later, the speaker pledged that Republicans could try to advance their own proposal through the House, describing such legislation as “close” to complete. Rep. Garret Graves (R-La.), who has served as McCarthy’s top emissary in the debt ceiling discussions, separately called the legislative push a “basis for negotiations to start,” adding that Republicans under no circumstances would accept Democrats’ request to raise the limit without conditions.
In response, Biden publicly reiterated that he would discuss broad fiscal issues with McCarthy. But the president maintained his refusal to haggle over the debt ceiling, saying that a failure to act could inflict “needless economic pain” on Americans. Biden also called on the GOP to issue a budget, weeks after the White House unveiled a blueprint that included $2 trillion of deficit reduction over the next decade, largely driven by tax increases. But Republicans have not yet produced their plan — and some fear they never will as they shift their attention to negotiating over the debt ceiling.
Returning this week to Washington, some of McCarthy’s members have urged the speaker to bring a bill up for a vote as soon as this month as they aim to increase the pressure on Senate Democrats and White House officials to negotiate.
“We shouldn’t go home until we get a debt limit bill passed in the House, even if we have to skip the first week of May back in our districts,” said Rep. Kevin Hern (R-Okla.), the leader of the largest GOP bloc, the roughly 175-member Republican Study Committee. “It’s time for us to get on a bill, on the floor, and for us to get 218 votes and send this to the Senate, and let the president and Democratic senators say they don’t want to rein in spending.”
But a significant portion of the GOP framework remains unresolved, including exactly how much to cut. Some Republicans have sought what they describe as “structural reforms,” including additional curbs on spending if debt becomes too great a percentage of gross domestic product, a measure of national economic output, one of the sources said.
Many GOP lawmakers and aides admit it is not even clear whether their emerging plan can actually attract 218 votes — the number needed for passage — at the time of its introduction. The uneasiness reflects persistent divisions in a fractious conference with 222 votes, a four-vote advantage, which struggled only three months ago to elect a House speaker.
“I don’t expect unanimous consent as far as getting 218 votes right off the bat,” said Rep. Ralph Norman (R-S.C.), a member of the House Freedom Caucus. He said he expected McCarthy to unveil an “action plan” Monday that paves the way for the chamber to address the debt ceiling.
House conservatives issue new spending demands in debt ceiling debate
The varying GOP factions, known as the “five families” — an allusion to the film “The Godfather” — have projected an air of unity through meetings, news conferences and other public support for McCarthy’s broad demands. Behind the scenes, though, the speaker has been at war with his own members: He has lost confidence in Rep. Jodey Arrington (R-Tex.), the chairman of the House Budget Committee, according to multiple aides and lawmakers, and doesn’t have complete trust in Rep. Steve Scalise (R-La.), the House majority leader.
McCarthy’s top allies have tried to downplay some of the tensions in recent weeks. His top aides, meanwhile, have labored to sell conservatives on the idea that the early framework is beneficial. They have pointed to the fact that a one-year debt ceiling increase would permit them a second opportunity next year to extract more spending concessions from Biden, according to one of the people familiar with the matter.
But with no bill yet in hand — and Democratic support seemingly unattainable — some House Republicans have acknowledged in recent days that their quarrelsome majority is far from averting an emerging fiscal crisis.
“I saw this train wreck coming,” said Rep. Steve Womack (R-Ark.), a top Republican on the House Appropriations Committee. “This is going to be the ultimate test of leadership: How do you get competing priorities and different ideologies within the same political party to come to agree on matters of spending or for debt ceiling?”
“How are you going to get those competing factions together at the table, agreeing to something you can get 218 votes on?” he said. “And because it is a thin majority, it is going to test the leadership skills of Kevin McCarthy.”
Source link: https://www.washingtonpost.com/business/2023/04/15/with-few-seven-weeks-left-gop-races-ready-debt-ceiling-bill/