McCarthy Prepares a GOP Offer on the Debt Limit

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.

• GOP Debt Limit Plans Begin to Take Shape in House – Roll Call
• US Producer Prices Fell in March by Most Since Start of Pandemic – Bloomberg
• Top House Republican Calls for House to Address Debt Ceiling by End of April – HuffPost
• Key House GOP Lawmaker Urges Debt Limit Vote This Month – Roll Call
• Key House GOP Caucus Releases Debt Ceiling Priorities – The Hill
• 100 Days in Power: House GOP Honeymoon May Be Over – The Hill
• McConnell Will Return to Senate Monday After Recovery From Injuries – Roll Call
• GOP Lawmakers Seek to Cut Off Funding to Bragg, Other Prosecutors – The Hill
• Eight Months In, What Is Happening With Biden’s CHIPS Act? – Bloomberg (podcast)
• Biden Administration to Widen Medicaid and ACA Health Coverage to DACA Immigrants – Washington Post
• U.S.-China Split Shadows Hopes for Lifting Debt Load From Global Economy – Washington Post
• Bank Turmoil Squeezes Borrowers, Raising Fears of a Slowdown – New York Times
• Why Is America Still Flying the A-10 Warthog, a Cold War Relic? – Wall Street Journal
• Misinformation Defense Worked in 2020, Up to a Point, Study Finds – New York Times

• Republicans’ Self-Inflicted Budget Impasse – Ryan Cooper, American Prospect
• The Biden-Trump Plan to Cut Social Security – David McIntosh, Wall Street Journal
• Biden Is Failing to Restore the Competence of the US Government – Brett Bruen, CNN
• U.S. Voters Want Limited Government – Judge Glock, Wall Street Journal
• The Forgotten Left Economics Tradition – Meg Jacobs, American Prospect
• Political Polarization Fuels Medical Misinformation – Faye Flam, Bloomberg