House Republicans said Thursday that they are preparing a “term sheet” of conditions they want met by the President Joe Biden and congressional Democrats before they agree to raise the federal borrowing limit and avert what would be a calamitous debt default.
Rep. Jodey Arrington (R-TX), the chair of the House Budget Committee, told reporters that Republicans are finalizing a list of spending cuts they will demand and that Speaker Kevin McCarthy (R-CA) has prioritized finishing that “deal sheet” so that the GOP can extend a first offer in debt limit negotiations.
The $31.4 trillion limit needs to be raised to cover outlays previously authorized by Congress, and the Treasury Department is currently employing “extraordinary measures” to avoid breaching the limit and defaulting on its debt. The White House insists that Congress needs to raise the limit without conditions. Republicans say the government isn’t going to default and are pushing a plan to prioritize federal payments, an idea that the Biden administration has said won’t truly avert a default or the economic turmoil it would bring.
There hasn’t been much movement in this standoff since Biden and McCarthy met on February 1.
“If we're going to negotiate, we're going to have to have something on paper that gets the support of at least 218 of our members,” Arrington said, according to Reuters. Republicans hold a slim 222-213 majority in the House, but getting near unanimity in their caucus for debt and budget proposals, let alone Democratic support, is likely to prove challenging.
The GOP proposal reportedly will entail $130 billion in cuts to domestic agency funding next year, with growth in those accounts then capped at 1% a year for a decade.
The push to finalize a term sheet to present to Biden means that the House Republican budget will be delayed past the April 15 target. “Arrington said he still aims to write a plan that balances the budget in 10 years, a herculean task that would require cutting either defense spending or entitlement spending if the Trump-era tax cuts are extended,” Bloomberg’s Erik Wasson notes.
The bottom line: The Congressional Budget Office projects that the Treasury Department will be unable to meet its obligations at some point between July and September. Given the recent concerns about the banking sector, the pressure is building to avoid any further financial scare — and some Republicans are starting to feel it.
“The standoff is raising concerns among Senate Republicans in particular, who worry about the lack of a contingency plan if there’s no agreement soon between Biden and McCarthy,” Punchbowl News reports. “Some GOP senators believe that the longer this drags on, the more likely it becomes that they’ll have to accept a clean debt limit hike in order to stave off a catastrophic default.”