The U.S. The U.S. hit the debt limit of $31.4 trillion on Thursday. This intensified a political struggle already in Washington.
Some House Republicans would like to use must-pass legislation in order to increase the nation’s borrowing power to extract federal spending cuts to balance the federal budget. However, this could lead to cuts to some of the most popular social programs in the country.
“You only have so much leverage and negotiating power. One of these is the debt ceiling. No one in America wants to see the debt ceiling go up again blindly if there aren’t structural reforms. Chip Roy, a Republican from Texas, said last week that nobody wants it.
Roy was part of a group that negotiated handshakes with Rep. Kevin McCarthy (R-Calif.) in order to win their votes for House Speaker. McCarthy has pledged to fight for spending reductions in Congress.
Biden and the congressional Democrats have stated that they won’t engage in negotiations regarding the nation’s borrowing power. Karine Jean-Pierre, White House press secretary, reiterated this week that Congress must address the debt limit without conditions.
According to the Treasury Department, “extraordinary measures” will be taken to pay off the debt by June. If Congress fails to increase the debt limit by June, it could lead to a debt default that would have devastating economic consequences around the world.
Even political brinkmanship regarding raising the debt limit can lead to consequences. This was the case in 2011, when a dispute between congressional Republicans, and the Obama administration caused a stock market crash and resulted in the U.S. government’s first ever credit rating downgrade.
“After witnessing a whole month of debt ceiling negotiations, they doubted the ability of our political system to act,” President Barack Obama stated at the time.
Republicans are increasing the stakes and their demands this time.
First, many Republicans are seeking concessions in the form steep cuts to annual discretionary spending bills, which cover all aspects of the federal government except the Defense Department. Rep. Mark Amodei (Republican from Nevada) sits on House Appropriations Committee. This committee determines annual spending. He points out that nonmilitary discretionary spend is only a small fraction of the debt.
He says, “But if it’s something you really want to talk about and you say the budget’s big deal, then you have to go where there’s money.” That money is in the entitlements that make up our social safety net, such as Medicare, Medicaid, and Social Security. Amodei offers a piece advice to Republicans who want to make those changes: “Better to have your helmet on and your chin strap ON.”
When it comes to changing the social safety net, the Republican Party has not had a good track record. Former President George W. Bush attempted and failed to overhaul Social Security in the future for retirees. In 2012, Ryan was Mitt Romney’s running mate and supported shifting Medicarefrom guaranteed benefits to a voucher system. This was a key target for Democratic attacks. A well-known attack ad by a liberal group featured Ryan looking-alike pushing granny off a cliff.
A new round of debates about the nation’s fiscal future is welcome for deficit hawks such as Maya MacGuineas (who runs the nonpartisan Committee for a Responsible Federal Budget). She says, “We are reaching the point where we just can’t delay this any longer because both of those trust funds are heading towards insolvency in very short time.”
MacGuineas argues that Congress should not flirt with defaulting on debt to get those budget reforms. “There should not be any discussion about defaulting anywhere. It is important that we remove the debt ceiling without drama.”
Leslie Dach was an Obama Administration employee and is now the director of the liberal advocacy group Protect Our Care for health care. He claims Republicans are pushing for a political battle with no clear plan to win a policy victory, while Democrats remain united in opposition and control the Senate and White House. He says that “Lighting the fuse isn’t a good strategy. You can’t stomp it down until it reaches the explosive.”
McCarthy must balance his assurances to the public that his party won’t allow a default on their debts with a delicate balance act. He did this again last week.
He said that Republicans would not cut spending and that they didn’t want to create fiscal problems in our economy. “We have to change how we spend money in this country and we will make sure that it happens.
McCarthy is currently the only leader at negotiations.
Copyright 2023 NPR. Copyright 2023 NPR.
Transcript:
HOST: A MARTINEZ
Janet Yellen, Treasury Secretary, says that the nation is expected to reach its debt limit today. This raises the stakes in the partisan tug-of-war underway in Washington. House Republicans are seeking to use must-pass legislation as leverage to increase the nation’s borrowing power to obtain spending cuts. This could also mean that the cuts are being sought in some of our most popular social programs. Susan Davis, NPR’s political correspondent, previews the confrontation.
SUSAN DAVIS BYLINE: To win the votes to be speaker of California, Kevin McCarthy had to make a lot promises. One of those promises was to fight for federal spending reductions at every turn in Congress. Here’s Texas Republican Chip Roy, who made that promise.
(SOUNDBITE RECORDING OF ARCHIVED)
CHIP ROY: You only have so much leverage and negotiating power. One of these is the debt ceiling. No one in America wants to see the debt ceiling go up blindly if there aren’t structural reforms. That is what nobody wants.
DAVIS: President Biden and the congressional Democrats want it, as White House Press Secretary Karine Jean-Pierre reaffirmed earlier this week.
(SOUNDBITE RECORDING OF ARCHIVED)
KARINE JEANPIERRE: Congress must address the debt limit, and it must do so with no conditions.
DAVIS: The Treasury Department has stated that extraordinary measures will be taken to pay off the debt by June. It would be a debt default that could have devastating economic consequences across the globe if Congress does not raise it by June. Even political brinksmanship can have serious consequences when it comes to raising the debt limit. This was evident in 2011, when a dispute between the Obama administration and Congress caused a stock market meltdown and resulted in the United States’ first ever credit rating downgrade. Here’s Obama.
(SOUNDBITE RECORDING OF ARCHIVED)
BARACK OBAMA
DAVIS: Republicans are increasing the stakes and demands this time. Many want steep cuts to annual discretionary spending bills, which cover all aspects of the federal government except the Pentagon. Nevada Republican Mark Amodei sits on the Appropriations Committee which decides annual spending. He also points out that discretionary spending other than military is only a small fraction of the debt.
(SOUNDBITE RECORDING OF ARCHIVED)
MARK AMODEI
DAVIS: That money is in entitlements which make up the nation’s social safety net, Medicare and Medicaid, Social Security. Amodei offers some advice to Republicans who want to make those changes.
(SOUNDBITE RECORDING OF ARCHIVED)
AMODEI: It’s better to have your helmet on and your chin strap.
DAVIS: The Republican Party has not had a good track record in trying to reform the social safety net. Former President Bush attempted and failed to reform Social Security for future retirees. Paul Ryan, former Speaker of the House, supported shifting Medicare from a guaranteed to a voucher system. This was a key Democratic attack during Mitt Romney’s 2012 presidential campaign. One liberal group ran an infamous, wordless attack ad in which a Paul Ryan-like character pushes a granny off a rock while “America The Beautiful” plays in background. A new round of debates about the nation’s fiscal future will be welcomed by deficit hawks such as Maya MacGuineas (who runs the nonpartisan Committee for a Responsible Federal Budget).
MAYA MACGUINEAS – We are at the point where it is impossible to delay because both trust funds for these programs are heading towards insolvency very quickly.
DAVIS: However, MacGuineas believes that Congress should not be allowed to flirt with a default on its debt to get those budget reforms.
MACGUINEAS: No discussion should take place about defaulting. It is important that we remove the debt ceiling without drama.
DAVIS: Leslie Dach, a former Obama official and now the head of the liberal advocacy group Protect Our Care for health care, worked under President Obama. He stated that Republicans want a political fight, but have no plan to win with Democrats controlling the Senate and White House.
LESLIE DACH – Lighting the fuse and thinking you can knock it down before it reaches explosive is not a good strategy.
DAVIS: McCarthy must strike a delicate balance between reassuring the public that his party won’t allow a default on their debt as he did last week.
(SOUNDBITE RECORDING OF ARCHIVED)
KEVIN MCCARTHY : We don’t want to cause any fiscal problems in our economy and we won’t.
DAVIS: However, DAVIS insists that Republicans will reduce spending.
(SOUNDBITE RECORDING OF ARCHIVED)
MCCARTHY : We have to change how we spend money in this country. We’re going make it happen.
DAVIS: He’s currently the only leader at the negotiating tables.
Susan Davis, NPR News Washington. Transcript provided by NPR. Copyright NPR.
