White House Blasts ‘Ransom Demands’ in GOP Debt Plan

The White House
Reuters
By Yuval Rosenberg

Happy Thursday! It’s National High Five Day, so go ahead and give your friends and loved ones some fist bumps. We wouldn’t want to be too conformist. Here’s what’s happening.

White House Blasts ‘Ransom Demands’ in GOP Debt Plan

The White House on Thursday firmly rejected the 320-page debt ceiling plan released by House Speaker Kevin McCarthy (R-CA), saying it would damage the U.S. economy while aiding corporations and the wealthy.

Deputy Press Secretary Andrew Bates said the McCarthy plan, which would raise the debt limit by $1.5 trillion in exchange for a long list of spending cuts and other concessions, amounts to “ransom demands for not triggering a catastrophic default and sending the U.S. economy into a needless, unprecedented tailspin that kills millions of jobs.”

In an analysis of the plan obtained by the Associated Press, White House budget director Shalanda Young says that the McCarthy plan would require a 22% cut in non-defense discretionary spending. “The legislation Congressional Republicans have drafted is designed to avoid leveling with the American people about how these cuts would impact their lives,” Young writes in a draft of the analysis. “This bill is vague by design — but that doesn’t obscure the fact that it will force devastating cuts that will hurt millions of people, damage our economy and undermine our national security.”

According to the analysis, the spending cuts outlined by the McCarthy plan could lead to the loss of 100,000 jobs among teachers, while 200,000 fewer children would be enrolled in Head Start. About 1.7 million women and children would lose their food aid, and more than a million elderly people would lose access to the Meals on Wheels program. Tens of thousands of workers providing health care to veterans would be eliminated, while the nation’s troubled rail system would lose roughly 7,000 inspectors.

Taking aim at green energy: With McCarthy saying he wants to end Biden’s “green giveaways,” the House GOP plan would slash billions in federal spending provided by the Inflation Reduction Act that aims to boost the development and production of cleaner energy. The proposed cuts include eliminating tax credits for companies that make electric vehicles and batteries, solar power infrastructure and other renewable technologies.

The White House took note of those proposals, charging that McCarthy’s plan would destroy jobs, including thousands associated with green energy initiatives that are being created in Republican-led states. “’Let me kill over 100,000 manufacturing jobs – mostly in red states – or I’ll force America to default on bills we racked up and trigger a recession,’ is the opposite of a compelling message,” Bates said in a memo shared with USA Today.

The memo names specific Republican lawmakers and the jobs that could be lost if McCarthy’s plan takes effect. “Will Rep. Marjorie Taylor Green vote to eliminate the investments helping to create 2,500 solar manufacturing jobs in her district?” Bates said. “Will Rep. Joe Wilson vote to rip tax credits away from a $2 billion EV manufacturing investment in his district?”

Dems getting nervous? Although the White House seems firm in its opposition to McCarthy’s demands and many Democrats are backing the White House stance, some in Biden’s party are worried about the president’s refusal to engage with Republicans.

“They’ve got to do it soon,” Rep. Debbie Dingell (D-MI) told Politico, referring to a Biden-McCarthy negotiation session. Another Democratic lawmaker, Rep. Greg Landsman of Ohio, said, “I don’t think there’s any harm in the two of them sitting down to talk. The idea that we’re even coming this close to a potential default is insane.”

Sen. Joe Manchin (D-WV) also made it clear that he thinks Biden should engage with Republicans right away. “I applaud Speaker McCarthy for putting forward a proposal that would prevent default and rein-in federal spending,” Manchin said in a statement. “While I do not agree with everything proposed, the fact of the matter is that it is the only bill actually moving through Congress that would prevent default.”

Manchin, who has been critical of various spending proposals backed by the White House, leveled strong criticism against the president. “Our elected leaders must stop with the political games, work together and negotiate a compromise,” he said. “Instead, it has been more than 78 days since President Biden last met with Speaker McCarthy. This signals a deficiency of leadership, and it must change. … For the sake of the country, I urge President Biden to come to the table, propose a plan for real and substantive spending cuts and deficit reduction, and negotiate now.”

Still, party leaders remain firmly by the president’s side. House Minority Leader Hakeem Jeffries (D-NY) said it doesn’t make sense for Democrats to negotiate with Republicans until they can pass McCarthy’s plan. “I don’t know whether reasonable people would conclude that we should be negotiating against ourselves. That’s not a logical place to be,” he said.

And Senate Majority Leader Chuck Schumer (D-NY) rejected the GOP House plan, calling it a “MAGA wish list” that “has no chance of moving forward in the Senate.” Schumer also noted that Republicans have said the bill closely reflects the wishes of the Freedom Caucus, the most conservative group in the House. “That shows you how hard right this wish list truly is,” he said.

The bottom line: No change yet in the White House’s stance as it refuses to negotiate an increase in the debt ceiling in exchange for budget cuts. We’ll see what happens if or when Republicans actually pass their plan in the House. If they are able to do so — and that is still uncertain — we may see a shift in attitudes that opens the door to new discussions about how lawmakers and the White House can move forward with a viable plan to avoid a default on U.S. financial obligations.

McCarthy Triples Down on ‘Boehner Rule’ From Past Debt Limit Fights

The debt-limit fight now heating up between House Speaker Kevin McCarthy (R-CA) and President Joe Biden is reminiscent of battles fought 10 and 12 years ago — only McCarthy may be staking out an even more aggressive position.

Back in 2011, when a Democratic president and congressional Republicans were embroiled in a previous showdown over raising the debt ceiling, House Speaker John Boehner set a requirement that any increase in the government’s borrowing limit should be matched or exceeded by the amount of spending cuts.

“Without significant spending cuts and changes to the way we spend the American people’s money, there will be no debt limit increase,” Boehner told the Economic Club of New York in a May 2011 speech similar to one that McCarthy gave this week at the New York Stock Exchange. “And cuts should be greater than the accompanying increase in debt authority the president is given.”

That dollar-for-dollar standard became known as the “Boehner Rule.” Then-Sen. Rob Portman (R-OH) laid out the rationale in a 2011 piece for The Wall Street Journal arguing that the rule should be made permanent: “If we pledge to hold all future debt-limit increases to the same ‘dollar-for-dollar’ standard, we can balance the budget within a decade.”

But Republicans shifted away from the rule during another debt-limit fight in 2013. Boehner early on told reporters that “dollar for dollar is the plan,” but Republicans later dropped the idea, shifting their emphasis from discretionary spending cuts to the mandatory side of the budget. "Dollar for dollar is difficult," Rep. Tom Price said at the time. "The discretionary spending itself is $1 trillion a year, and if you're running a $1 trillion deficit annually, it's tough to find the savings solely in discretionary spending to match the increase in debt-limit."

By February 2014, Boehner’s Republicans had given up entirely on extracting a price for a debt limit increase, relying on Democrats in the minority to help lift the ceiling. “The ‘Boehner Rule’ died today,” said ABC News. And Politico explained: “The sharp shift in tactics within the House and Senate GOP caucuses reflects a hardening realization after three years of partisan brinkmanship over the budget: Fighting over the debt in a crisis-like atmosphere is a political loser.”

That lesson was not embraced in all corners of the party. Boehner consistently struggled to wrangle the most conservative members of his conference, who pressured him to push for deeper spending cuts and more aggressive negotiating stances in taking on a Democratic president. He ultimately resigned in 2015 under pressure from his right flank.

McCarthy has faced similar pressures. But where the Boehner rule called for dollar-for-dollar parity in debt increases and spending cuts, McCarthy has heeded the demands of the far-right members who hold leverage over the current, narrow House GOP majority. The plan he released this week calls for about $4.5 trillion in spending cuts in exchange for about $1.5 trillion in borrowing authority, or enough to get the government through March 2024, whichever comes first. That’s a 3-to-1 ratio, in line with some conservative demands dating back a decade or more.

Still, as noted above, some Republicans insist the plan doesn’t go far enough and are reportedly pushing for stricter work requirements for food stamps, for example. And some of McCarthy’s conservative members insist this plan isn’t just an opening offer in talks with Biden — it’s their only offer. So even if McCarthy can get 218 votes for the plan in the House, his support among hardliners could crack after the Senate and White House wind up engaged in dealmaking. Or if Democrats hold fast to their insistence that they won’t negotiate, we may find out that partisan brinkmanship could cost a lot more jobs than just the speaker’s.

Number of the Day: $1 Billion

President Biden on Thursday pledged $1 billion in U.S. funding to the Green Climate Fund (GCF), which the administration says is the world’s largest climate and environment focused multilateral fund. The new infusion of money doubles the U.S. contribution to the fund, but the total remains short of the $3 billion promised by President Barack Obama. Politico says the move “seeks to burnish United States credibility after former President Donald Trump and congressional Republicans had zeroed out U.S. contributions for the program.”

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