House Republicans will attempt to agree to lift the federal $31.4 trillion debt ceiling while cutting government spending when Congress returns this week; after being stonewalled for months by Democrat President Joe Biden’s demands, they agree without conditions.
Speaker of the House Kevin McCarthy spoke Monday at the New York Stock Exchange, laying out conditions the GOP wants Democrats to agree to in exchange for movement on the debt ceiling.
McCarthy offered little details before the talk, but Republicans have proposed keeping annual spending growth to 1% for a decade, boosting energy production and reducing regulation.
Members of the speaker’s sometimes-fractious caucus, who hold a 222-213 majority, haven’t agreed on any legislation. Any proposals the GOP would introduce would have to be negotiated with Democrats, who control the Senate, before becoming law.
The White House, which leads the Democrats’ approach to the debt ceiling, has said the Republicans’ proposals are realistic.
Nonpartisan forecasters have warned that the federal government may face a historic default during the summer if Congress doesn’t act. A default might cripple the world and U.S. economies and force a downgrade of the credit rating of the U.S., similar to what happened in a 2011 debt standoff.
However, McCarthy’s speech, which the GOP says is meant to draw support from Wall Street for negotiations on spending, could spark movement after months of inaction.
President Biden insisted that Congress pass a “clean” hike in the debt limit without conditions and noted it was done three times during his predecessor Donald Trump’s term as president.
“At this point, I think there’s no choice for Republicans and the speaker but to bring forward some type of proposal,” said the number three Republican, Representative Tom Emmer.
According to a source, conservatives hope to pass the prospective legislation by the end of April, which could lift the borrowing limit until May 2024. During the presidential campaign, the legislation would set the stage for another debate on the debt ceiling in the closing months of 2024.
First, the GOP must agree on a proposal that might win the support of at least 218 of 222 members.
“Getting us all on the same page is a challenge. But it’s not impossible, and I’m optimistic that we’ll get there. This is an issue we’ve been talking about for some time,” said Ben Cline, Republican Representative.
As a member of the hardline House Freedom Caucus, Cline sits on both the Appropriations and House Budget Committees and is helping to create a budget plan for the Republican Study Committee, the largest caucus in Congress.
Risks of the proposal for both sides
So far, the White House has dismissed the proposals.
“Speaker McCarthy is adopting the extreme MAGA House Republican position: threatening our economic recovery, hardworking Americans’ retirement, and catastrophic default in order to force devastating cuts,” said Andrew Bats, White House spokesperson.
House GOP members maintain that the proposals would win enough public support to force the Democrats and Biden into negotiations, like the party’s bill to overturn changes in Washington, D.C.’s criminal code passed Congress last month, despite initial opposition by Dems.
McCarthy and Biden met at the White House in February to discuss the standoff. Still, they have held no further talks, and the administration has asked House Republicans to release a budget proposal.
In March, the White House unveiled its budget proposal to cut U.S. deficits by $3 trillion over the next ten years. However, with the House Budget Committee not expected to provide a spending play soon, the GOP focus has shifted to the debt ceiling plan.
GOP Representative Garret Graves, a top adviser to McCarthy, has led debt ceiling talks within the Republican conference and said legislation might follow the outline in a March 28 letter from McCarthy to Biden.
“We’re continuing to discuss both strategies and putting a little more meat on the bones or translating the speaker’s letter into legislation,” said Graves in an interview.
Although McCarthy’s letter contained little details, Republicans are considering a proposal that may reset nondefense discretionary spending to levels equaling 2022 levels, reduce regulation, boost energy production, reset the debt ceiling to a ratio of debt to gross domestic product, and hold annual spending at 1% for a decade.
Some Republicans favor a clean debt ceiling increase as President Biden has demanded.