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House Republicans are poised to steer the country into a series of fiscal showdowns as they seek to force the White House to accept massive spending cuts, threatening a return to the political gridlock that once nearly paralyzed the economy and almost drove the US government into default. .
The prospect of a catastrophe rose dramatically after conservatives brokered a deal with Rep. Kevin McCarthy (R-Calif.) that secured his election as House Speaker early Saturday. Ending days of dumb debate, party lawmakers said they agreed to push a hard line in upcoming budget talks, possibly including demands for significant changes to Social Security and Medicare.
“This is the biggest challenge in this Congress,” Rep. Patrick T. McHenry (RNC), a top McCarthy ally, said shortly after the speaker’s vote, adding that “the debt, the deficit and the tax house, that’s a big priority for House Republicans.”
Kevin McCarthy was elected Speaker of the House, breaking the historic deadlock
In the hours before 3 p.m speaker’s final vote, Republicans sketched the first outlines of what they might pursue next year: cutting spending by billions of dollars, much of it targeting federal health, education, labor and other domestic agencies that Democrats say are already underfunded.
Rep.-elect Kevin McCarthy (R-Calif.) finally won enough votes to become Speaker of the House after the fifth-longest battle in history. (Video: John Farrell, JM Rieger/The Washington Post)
Some GOP lawmakers even indicated they would insist on those cuts, along with other more structural changes to federal entitlement programs, in exchange for voting to raise the debt ceiling. This cap is the statutory limit on how much the US government can borrow to pay its existing bills, and lawmakers must act to raise or suspend it or the country will default, which many experts fear it will cause a global fiscal calamity.
“Make no mistake, the debt ceiling issue itself is meant to leverage better policies to move forward on spending,” said Rep. Adrian Smith (R-Neb.), who is vying to lead the maximum focused on taxes. committee in the Chamber. “I think we shouldn’t shy away from it.”
The new threats raised the prospect of a high-stakes political showdown, as one misstep could lead to financial havoc and a full-blown recession. More than a decade ago, the mere possibility that the US could not pay its bills shook markets around the world, while costing US taxpayers more than a billion dollars.
Citing those earlier clashes, many Democrats this week issued their own ultimatums: They said they were willing to discuss federal spending with their newly empowered Republican counterparts, but would not haggle over the debt ceiling.
“I think the president has been very clear and will continue to be clear: There is no negotiation over whether or not America pays its bills on time,” said Sen. Chris Van Hollen (D-Md.), a member of the chamber appropriations committee.
“This is an obligation that all members must take seriously,” he continued. “We will say, again and again, there is a line in the sand here, and we will not give the extreme Republicans their wish list in exchange for simply allowing the country to pay its bills on time.”
Still, McCarthy’s election early Saturday morning emboldened House Republicans, having overcome their fierce ideological divisions, at least for now. Speaking to reporters after the result, McCarthy said the political discord that characterized the debate over the past week had been instructive, helping the party “build the trust between them” needed to govern.
Now it will be up to McCarthy to hold Republicans together in a chamber where the GOP majority is thin and, as his rocky rise proved, conservatives wield immense power. Many of those lawmakers expect McCarthy to follow through on a wide range of promises, including his pledge to cut spending and extract other policy concessions from a Democratic-led Senate and the White House. If he doesn’t, the right-wing bloc has the power to try to remove McCarthy as speaker.
Republicans have at least two key tax deadlines to contend with this year. They must raise the debt ceiling before the government breaches the debt ceiling, which could happen as soon as this summer, according to Shai Akabas, the director of economic policy at the Bipartisan Policy Center, noting that the exact date it will depend on the next federal edition. indicators
But lawmakers must also work to fund federal agencies and programs before the current fiscal year ends on Sept. 30. Democrats and Republicans took up the current $1.7 trillion spending measure, known in legislative parlance as the omnibus, in the 2022 recess, and a failure to replace it would lock Washington into the autumn
With the election unresolved, Congress is gearing up for new spending showdowns
Although the issues are technically separate, Republicans have first expressed interest in merging them, raising the stakes in the event of congressional inaction. “We believe there should be specific, specific limits on spending, coupled with an increase in the debt ceiling,” stressed Rep. Chip Roy (R-Texas), a member of the conservative House Freedom Caucus who had opposed McCarthy as spokesman until he assured. a series of concessions.
Heading into those fights, some Republicans have pledged to cut federal spending to at least levels enacted in fiscal 2022, which would mean billions of dollars in cuts compared to current spending. Other party members said they also intend to produce a budget plan that balances the federal ledger, which last ran a $1.38 trillion deficit, over the next decade.
Democrats this week denounced the approach: Rep. Rosa L. DeLauro (D-Conn.), the party’s top lawmaker on the House Appropriations Committee, blasted it as a “substantive deal” that ” It kills the 2024 government funding process before it has even begun, all but guaranteeing a shutdown.”
McCarthy has not shared in detail the extent of the promises he made to the Conservatives in the pursuit of the speaker’s gavel; his office did not respond to a request for comment Saturday. But many GOP lawmakers this week sounded increasingly optimistic about their newfound sense of purpose in trying to push through a tough spending deal with the White House.
“You can’t have a balanced budget unless you start cutting,” said Rep. Ralph Norman (RS.C.), another member of the House Freedom Caucus, who vowed to “watch every dollar.”
Almost 12 years ago, a similar political dynamic swept through Washington, with what some would describe as catastrophic results. The 2010 election saw the rise of the austerity-minded Tea Party, as right-wing pols took over the House and demanded sharp spending cuts from then-President Barack Obama.
At one point in 2011, Republicans seized on the debt limit to force the Democrats’ hand, refusing to raise the debt limit without major spending cuts. The ultimatum itself had immense and immediate consequences, costing taxpayers more than $1.3 billion, driving up borrowing costs and sending the Dow Jones industrial average sinking more than 2,000 points during the summer crisis.
To break the deadlock, Democrats eventually agreed to a plan that cut and limited domestic spending for 10 years, an approach that some budget experts described as indiscriminate and harmful to Americans who rely on government services.
“The cuts were incredibly damaging,” said Sharon Parrott, the director of the Center on Budget and Policy Priorities, a left-leaning think tank, noting that they hit a wide range of agencies, from the cost of child care until the ranks are exhausted. of the federal workers who oversee Social Security.
More than a decade later, statutory spending limits have been lifted, paving the way for Biden in the first two years of his presidency to take the Democratic majority and significantly expand the budget. Despite the recent boosts, however, Parrott acknowledged that some federal agencies and programs “have not recovered in many ways from what some of the cuts did.”
The debt itself still stands at more than $31 trillion, with an annual deficit of about $1 trillion or more over the past five fiscal years, according to the Treasury Department. While Republicans have blamed Democrats for the problem, the widening gap between what the country earns and spends is instead the result of bipartisan policymaking, from the package of tax cuts to Republican lawmakers’ $1.5 trillion in 2017 under President Donald Trump to roughly $5 trillion. in the emergency coronavirus aid that began under Trump and culminated in Biden’s American Rescue Plan.
Where did the covid aid money go?
“This is a year when we shouldn’t be borrowing more,” said Maya MacGuineas, leader of the Committee for a Responsible Federal Budget, which advocates for deficit reduction, citing recent spending and other factors such as high inflation
However, MacGuineas acknowledged that the political climate may make it impossible “to govern in any of the ways we need to,” opening the door, perhaps, to a rematch of the high-stakes clashes of 2011.
“I see them as very similar,” he said. “People are raising an issue that is very legitimate and important, which is the fiscal health of the country, but the approach and the solution is reckless and unrealistic.”
Under Trump, as the government neared the debt ceiling, Republicans held back on similar spending demands that risked fiscal calamity, and Democrats offered votes to avoid a default. But GOP lawmakers didn’t always offer Democrats the same support under Biden, threatening to push the country to the fiscal edge at one point in 2021…