April 20, 2023

Debt Ceiling

Republican U.S. House Speaker Kevin McCarthy on Wednesday unveiled a plan to raise the nation's debt ceiling by $1.5 trillion and cut federal spending by three times that amount, laying out an opening position in what is likely to be a tense partisan debate over government borrowing… McCarthy's proposal, which he unveiled on the floor of the House of Representatives, would cut the total amount of domestic and military spending to 2022 levels and cap growth at 1% annually in years to come.” Reuters

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From the Left

The left criticizes McCarthy’s proposal, and calls for an unconditional debt limit increase.

“Biden has very skillfully forced Republicans to repudiate their most unpopular positions, notably the ancient GOP desire to ‘reform’ (i.e., cut and privatize) Social Security and Medicare. So even as Biden and the Democrats consistently called for enactment of a clean debt-limit measure without conditions or drama, and the administration released a full budget proposal, McCarthy and his House Republicans have been unable to come up with much of anything specific…

“The proposed ‘limit on federal spending’ is actually just a cap on discretionary spending (i.e., not to entitlement programs) and does not distinguish between defense and nondefense spending. ‘Caps’ like this are what you propose when you literally have no clue what to propose; future Congresses will have to figure out what it means. The only specifics — the COVID clawback and toughened work requirements for benefit programs like SNAP — are boilerplate conservative policies… Right now, as they say in Texas, McCarthy is all hat and no cattle.”

Ed Kilgore, New York Magazine

“McCarthy is proposing only a one-year stopgap increase in the debt limit, meaning that if the Democrats surrender to GOP demands, there will be a fresh ransom to pay next spring. It’s also worth noting that McCarthy’s proposals on spending will push Republicans in vulnerable districts to vote for deep, unpopular cuts that won’t even wind up being enacted, just to appease GOP extremists in Congress who won’t back a final deal anyway.”

Jonathan Bernstein, Bloomberg

“The best solutions to averting what could be a major financial and economic calamity are legislative, which in the current hyperpartisan environment probably makes them out of the question. We could join all other nations but Denmark by abolishing the debt ceiling, thereby ending this problem forever. Or Congress could recognize the laws of arithmetic by making a higher debt ceiling accompany any legislated budget deficit automatically. Or it could do what it normally does: raise the debt ceiling again…

“The 14th Amendment to the Constitution states that ‘the validity of the public debt of the United States . . . shall not be questioned.’ If reneging on the public debt is unconstitutional, does that mean that other legitimate claimants—such as federal contractors or Social Security recipients—must be stiffed? Defaulting on any obligation of the U.S. government is reckless, and defaulting on the national debt is unconstitutional.”

Alan S. Blinder, Wall Street Journal

“If Biden, against his own instincts and the counsel of his advisers, began a process of trying to find some token cuts to give Republicans, that would muddy the waters and create pressure for more cuts. Biden fell into that trap when he was Obama’s vice president… The custom of requiring separate votes to increase the national debt only dates to 1917. Let McCarthy and company take Biden to court. Even this Supreme Court would think twice before ordering the United States to default on its debt."

Robert Kuttner, American Prospect

From the Right

The right generally supports McCarthy’s proposal, and urges Biden to negotiate.

The right generally supports McCarthy’s proposal, and urges Biden to negotiate.

“President Biden and Democrats in Congress ladled $6 trillion more onto the national debt in a mere two years on everything from electric car subsidies to an IRS blowout… The Speaker’s requests are hardly radical. Republicans want to return the federal government to the spending levels of the bad old days in . . . fiscal 2022. They then want to cap the growth of spending at 1% annually over 10 years for domestic discretionary accounts. These are reasonable limits after the spending sprees of recent years

“The challenge for the Speaker is that President Biden refuses to negotiate and has refused even to talk since they last met 75 days ago. Mr. Biden wants to run out the clock until the debt limit is reached, then predict a cataclysm, and assume the GOP majority will panic and pass an increase without any reform. He knows most of Wall Street and the press will be on his side, never mind the financial merits…

“It shouldn’t come to that. Mr. McCarthy says he wants a ‘reasonable negotiation,’ and a reasonable President would meet him part way.”

Editorial Board, Wall Street Journal

“The Inflation Reduction Act [IRA] is proving far more costly than was initially estimated thanks to higher than expected uptakes in electric vehicle tax credits. New analyses from Goldman Sachs and Brookings estimate that the tax credits could end up costing the taxpayer more than triple the initially estimated $271 billion price tag. Separately, while the Congressional Budget Office initially estimated that the IRA would reduce budget deficits by $54 billion over the next ten years, an updated CBO estimate predicts that the legislation will in fact increase budget deficits by $216 billion over the decade…

“Meanwhile, McCarthy has yet to find a way to square his party’s stated commitment to ring-fence Social Security and Medicare, and its determination to bring runaway spending under control… [But] Even if the GOP isn’t able to agree on a way to balance the books, the party does at least appear to acknowledge the serious problem of runaway spending.”

Oliver Wiseman, Spectator World

Rep. Jodey Arrington (R-TX) writes, “Next week Congress has a historic opportunity to restore the culture of work in America. The House Republican plan to raise the debt limit includes policies that restore the integrity of common-sense work requirements for able-bodied adults… Work requirements are popular. In fact, while the media focused on a Republican state Supreme Court candidate’s defeat in Wisconsin, nearly 80% of voters in the same election supported such conditions for welfare programs…

“A new nonpartisan Congressional Budget Office analysis shows that Alabama’s expanded work requirements led to a substantial increase in employment for families receiving Temporary Assistance for Needy Families benefits. Recipients saw their projected incomes increase, and the government saw its welfare spending decrease. Good jobs and a strong workforce remain the surest way out of generational poverty… This isn’t only a fiscal priority, it’s a moral imperative.”
Jodey Arrington, Wall Street Journal

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