New reporting and interviews with Republican leaders have clarified House Republicans’ intent to use threats to block an increase to the debt limit – which could lead to a default and a major economic crisis – subject to demands for policy concessions.
The Bipartisan Policy Center projects that the debt limit will need to be raised in the third quarter of 2023. Congress’ Joint Economic Committee, chaired by Rep. Don Beyer (D-VA) published a report last year titled: “Breaching the Debt Ceiling Could Harm Millions of Americans and Produce Economic Devastation.”
Debt limit fights were a hallmark of Republican congressional majorities during the Obama presidency, at the time Senate Republican Leader Mitch McConnell likened the tactic to hostage-taking. House Republicans now say one of their “top priorities” for a ransom in any future debt limit standoff would be demands for cuts to Social Security and Medicare:
Punchbowl: McCarthy On Debt Limit, Immigration And Ukraine
McCarthy signaled that Republicans would again hold the debt limit up for policy changes.
As we all remember, the debt limit was one of the bruising battles of the Obama presidency under then Speaker John Boehner. The U.S. government’s credit rating was downgraded for the first time ever following that 2011 debacle, but GOP lawmakers apparently are ready to try again in order to force “structural changes” to popular entitlement programs including Social Security and Medicare.
Here’s McCarthy on the debt limit:
“You can’t just continue down the path to keep spending and adding to the debt. And if people want to make a debt ceiling [for a longer period of time], just like anything else, there comes a point in time where, okay, we’ll provide you more money, but you got to change your current behavior. We’re not just going to keep lifting your credit card limit, right? And we should seriously sit together and [figure out] where can we eliminate some waste? Where can we make the economy grow stronger?”
We reminded McCarthy that he didn’t pitch these debt limit battles during the Trump era, during which the GOP ran up $7 trillion in new debt in only four years, including pandemic relief funding. Congress raised the debt ceiling three times during Trump’s presidency. Republicans only hold the borrowing cap hostage when Democrats are in the White House. McCarthy countered that President Joe Biden and congressional Democrats have spent too much money, in his view.
We asked McCarthy if he intended to try to reform entitlements as part of the debt ceiling debate. McCarthy said he wouldn’t “predetermine” anything.
Bloomberg Government: Entitlement, Spending Cap Plans Linked by GOP to Debt-Limit Deal
“Social Security and Medicare eligibility changes, spending caps, and safety-net work requirements are among the top priorities for key House Republicans who want to use next year’s debt-limit deadline to extract concessions from Democrats.
The four Republicans interested in serving as House Budget Committee chairman in the next Congress said in interviews that next year’s deadline to raise or suspend the debt ceiling is a point of leverage if their party can win control of the House in the November midterm elections.
The Republican position — which members are still formulating — could set the stage for an explosive standoff next year, reminiscent of the 2011 negotiations when the Tea Party wave of Republicans took on the Obama administration over spending.”
It’s also possible Republicans will demand process-focused legislation — such as requiring a reduction in the debt-to-GDP ratio — that could subsequently put major entitlement programs in play.
If Congress doesn’t raise or suspend the debt limit by the deadline, the federal government would default on payments officials had already agreed to make. Treasury Secretary Janet Yellen warned during 2021 negotiations that a default would be “a catastrophe” and could cause a financial crisis.
“The debt limit is clearly one of those tools that Republicans — that a Republican-controlled Congress — will use to make sure that we do everything we can to make this economy strong,” said Rep. Jason Smith (R-Mo.) , the ranking member of the House Budget Committee. He’s seeking the top GOP spot on the tax-writing Ways and Means Committee but said if he doesn’t get it, he’ll remain in his Budget Committee position.
Reps. Jodey Arrington (R-Texas), Buddy Carter (R-Ga.), and Lloyd Smucker (R-Pa.) are seeking the top spot on the Budget Committee if Smith gets the Ways and Means role. Those three agreed Republicans must use the debt-limit deadline to enact fiscally conservative legislation. Rep. Kevin Hern (R-Okla.), head of the Republican Study Committee’s Budget and Spending Task Force, also said the upcoming debt-limit deadline is “obviously a leverage point.”
Washington Post: GOP To Use Debt Limit To Force Spending Cuts, With Medicare, Social Security In Mix, McCarthy Says
House Minority Leader Kevin McCarthy (R-Calif.) said that if Republicans win control of the House the GOP will use raising the debt limit as leverage to force spending cuts — which could include cuts to Medicare and Social Security — and limit additional funding to Ukraine.
“You can’t just continue down the path to keep spending and adding to the debt,” the California Republican told Punchbowl News in a recent interview. “And if people want to make a debt ceiling [for a longer period of time], just like anything else, there comes a point in time where, okay, we’ll provide you more money, but you got to change your current behavior.”
“We’re not just going to keep lifting your credit card limit, right,” he added. “And we should seriously sit together and [figure out] where can we eliminate some waste? Where can we make the economy grow stronger?”
Pressed on whether changes to the entitlement programs such as Medicare and Social Security were part of the debt ceiling discussions, McCarthy said he would not “predetermine” anything.
The debt limit — the country’s borrowing cap — will need to be lifted next year to protect the country’s credit score and to prevent the United States from defaulting on its debt. But McCarthy suggested that his party would be willing to hold the debt limit up for policy changes.
Axios: GOP Leaders Prepare For 2023 Debt Limit "Nightmare"
GOP leaders, congressional aides and business groups are preparing for a potential "nightmare scenario" next year if House Republicans take back the majority: a debt limit showdown reminiscent of the near-crisis in 2011.
Why it matters: There are serious question marks — and underlying anxiety — surrounding what type of leader Rep. Kevin McCarthy (R-Calif.) will be if elected as House speaker. How he handles a debt limit showdown will be a crucial test of his leadership abilities for which key stakeholders are already privately planning.
The Hill: McConnell, McCarthy Public Splits Raise Questions About Ability To Govern
McConnell helped fashion a compromise in December that allowed Democrats to raise the debt limit through the Senate with a simple majority vote.
McCarthy and other House GOP leaders, by comparison, made raising the limit harder by saying they would not vote for such a measure even if it were attached to popular defense legislation.
This is already fueling anxiety that Congress is heading for another debt-limit standoff next year, with Republicans potentially in control of the House this time.
In 2011, the nation came perilously close to defaulting on its obligations with a Democrat in the White House and a GOP House. It prompted Standard and Poor’s to downgrade the nation’s credit rating.
Newsweek: Fox News Host Confronts GOP's Scalise on Proposed Medicare Cuts: 'Betrayal'
House Minority Whip Steve Scalise, a Louisiana Republican, on Sunday was confronted over potential voter discontent with the GOP's plans for Medicare.
Representative Scalise appeared on Fox News Sunday to discuss the upcoming midterm elections. As the minority whip, he is considered to be the second-highest-ranking Republican in the House.
As soon as his interview began, host Shannon Bream pressed Scalise over the party's plans for Medicare and Social Security should they regain the House majority in this year's midterms. Bream presented the lawmaker with a message from a concerned Fox News viewer, who characterized the GOP's plan for Medicare as a potential "betrayal."
"He's a Republican, he's very worried about you cutting his Medicare," Bream said as she relayed the message she purported to have received on Twitter. "He says it's a dealbreaker and a betrayal by the GOP."
In June, the Republican Study Committee, of which Scalise is a member, released a budget plan that included numerous suggested reforms for Medicare and Social Security, including raising the eligibility ages for each program to 67 and 70, respectively. The proposal further called for withholding payments for individuals who retire early or had a certain level of income, and also suggested using private funding sources for Social Security to lower income taxes.