McCarthy Prepares a GOP Offer on the Debt Limit

House Speaker Kevin McCarthy
Reuters
By Yuval Rosenberg

Happy Thursday and greetings from a sun-drenched New
York City, where the temperature reached 89 degrees. Here’s what
else is hot today.

McCarthy Preparing to Unveil a One-Year Debt Limit Suspension:
Reports

As Congress returns to session next week, House Speaker Kevin
McCarthy will be looking to jumpstart dormant negotiations over
raising the debt limit. His plan reportedly involves ramping up
pressure on President Joe Biden by putting together a package of
proposed spending cuts and putting a jolt into the markets.

Punchbowl News reported
that McCarthy and House Republican leaders are preparing a plan
that would suspend the debt limit until May 2024, potentially
setting up another showdown just as the presidential election
enters its final stretch.

The GOP plan would also cut discretionary spending to fiscal
year 2022 levels and cap that spending in some fashion. "One cap
being considered is $584 billion for non-defense discretionary
spending — excluding Veterans Affairs programs," Punchbowl says,
adding that the GOP plan seeks to limit spending increases to 1% a
year for the next decade.

For context, the non-defense allocation excluding Veterans
Affairs medical care was $597 billion in 2022 and $641 billion this
year. Biden’s budget proposed raising it to $688 billion for 2024 —
and $844 billion by 2033.

While the details of the plan are still in flux, according to

Roll Call, the draft being prepared reportedly
would also rescind unspent pandemic funding, prohibit student loan
forgiveness, roll back some clean energy tax credits, impose work
requirements on federal benefit programs and enact the House
Republican energy bill (H.R. 1) along with legislation cutting
regulations.

Republicans may have a difficult path to getting the 218 votes
they’d need to pass any such package, and whatever they might pass
would likely have no chance of clearing the Senate or getting
Biden’s signature. But the White House has been pressing McCarthy
to produce a budget and passing this bill would at least give the
speaker room to say that his conference is united and the ball is
in Biden’s court. White House spokesman Andrew Bates said earlier
this month that "House Republicans can’t negotiate the budget with
President Biden until they finish negotiating with themselves."

Another senior Republican calls for action this month:
Rep Kevin Hern (R-OK), the chair of the Republican Study Committee,
which includes a large majority of the House GOP conference, on
Wednesday urged his members to pass a debt deal this month. "The
debt limit talks we have had to date have been invaluable. But the
time for discussion is coming to an end. The time for action is
now," he wrote in a letter first reported by the
Daily Caller. "In just five days, House members
will return to Washington. Passage of a strong debt limit bill
before the end of the April legislative session must be the
chamber’s top priority. We must work night and day to get it passed
to show the American people we can be trusted and force the Senate
and White House to answer for their dereliction of duty."

McCarthy will head to Wall Street: To further add
pressure on Biden, McCarthy is set to give a high—profile speech
"on the economy" Monday morning at the New York Stock Exchange.
"McCarthy’s team believes that key players on Wall Street aren’t
cognizant of the fact that debt limit and government spending talks
are nowhere," Punchbowl says. "And McCarthy wants the finance world
to know that Congress won’t hike the debt limit without spending
reductions."

In other words, McCarthy is looking to squeeze the president by
drumming up some fear on Wall Street, which up until now has been
mostly sanguine about the debt limit standoff, confident that it
will be resolved without major damage to the full faith and credit
of the United States.

But as Punchbowl notes, we’ve seen this McCarthy playbook before
— President Ronald Reagan gave a speech at the New York Stock
Exchange in 1985 and former Speaker John Boehner laid out his
demands there at the start of a similar debt limit fight in
2011.

That fight
did not end particularly well.

House GOP’s Main Street Caucus Releases Debt Limit
Priorities

Reps. Dusty Johnson (R-SD) and Stephanie Bice (R-OK), the
leaders of the House GOP’s Main Street caucus, released a letter to
House Speaker Kevin McCarthy Wednesday laying out the demands of
their group in exchange for raising the debt ceiling.

"We cannot support a debt ceiling increase without much-needed
fiscal reforms," they wrote, adding that "the 70 members of the
Republican Main Street Caucus have discussed the options you’ve
identified, as well as some others. This letter outlines those
proposals that have garnered the most support from our caucus, and
we have every confidence they can secure 218 votes in the U.S.
House of Representatives."

The proposed "reforms" are familiar ones, including setting
discretionary spending at fiscal year 2022 levels, rescinding
billions in unspent Covid funds, reversing President Biden’s
student loan forgiveness plan and strengthening work requirements
for food stamps. But the caucus proposed limiting growth in
non-defense discretionary spending to 1.5% a year over the next
decade, higher than the 1% floated by other Republicans.

The letter also called for the creation of a bipartisan
commission to be given six months to propose solutions to address
the finances of Medicare and Social Security. "These solutions will
not include cuts to Medicare or Social Security benefits," the
letter said. "Additionally, the commission should identify
unnecessary mandatory spending unrelated to Medicare and Social
Security, and direct those savings toward strengthening those two
programs. The findings of the commission should be privileged and
receive a floor vote within 60 days."

Number of the Day: Nearly $300 Million

The Biden administration on Thursday announced nearly $300
million in funding for nine projects to rebuild bridges in eight
states and the District of Columbia. The money comes from the
Bipartisan Infrastructure Law’s Bridge Investment Program. The
announcement closes out the administration’s three-week "Investing
in America" tour to promote infrastructure improvements and
technology investments. The administration said that it has funded
more than 4,600 bridge repair and replacement projects across the
country so far.

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