WASHINGTON — California House Speaker Kevin McCarthy says he and his fellow House Republicans have refused to raise the nation’s borrowing limit in order to force the calculation of the US’s $31 trillion national debt, and the economic downturn. He has repeatedly stated that he is risking a breakup.
“Without exaggeration, America’s debt is a time bomb that will explode unless we take serious and responsible action,” he said this week.
But the bill McCarthy introduced on Wednesday would only slightly change the trajectory of the country’s debt. It also includes a second, larger goal that has little to do with debt. That is to cut President Biden’s climate change and clean energy agenda and increase US production of fossil fuels.
The bill, which Republicans are set to vote on next week, aims to force Mr. Biden to negotiate an increase in the debt ceiling, which is currently capped at $31.4 trillion. Unless the cap is lifted, the federal government, which is heavily indebted to pay the bills, is expected to run out of cash as early as June.
more than half 320 pages of legislative text This is a rehash of the energy bill Republicans passed earlier this year, which was meant to speed up oil and gas drilling leases and permits. Republicans say the bill will boost economic growth and bring more revenue to the federal government. Congressional Budget Office Forecast A small loss of revenue.
The Republican plan also prioritizes removing clean energy incentives included in the climate, health and tax laws Biden signed into law. That law, known as the Inflation Reduction Act, included tax credits and other provisions to encourage electric vehicle sales, advanced battery production, utility upgrades, and various energy efficiency initiatives.
The proposal includes provisions to drastically cut government spending and deficits. In particular, he is noted for limiting the aggregate growth of certain types of federal spending from 2022 levels.
The bill imposes new work requirements that can reclaim some of the unused Covid relief money and cut federal spending on Medicaid and food aid. It would block the proposal and related plans to reduce loan payments to low-income college graduates.
The result will be a $4 trillion deficit reduction over the next decade, according to calculations by Washington’s Commission on the Responsible Federal Budget. The actual number is likely much lower. Lawmakers may vote to ignore spending caps in the future, as they have in the past.
Even if all the savings from this plan were realized, the national debt would exceed the economy’s annual output in 10 years. This is the standard held by Mr. McCarthy and other Republicans. often called a crisis.
The Republican plan, if fully enacted, is estimated to reduce that ratio, known as debt-to-GDP, by about 9 percentage points in 2033. By contrast, Mr. Biden’s latest budget, which collects trillions of dollars in new taxes from businesses and high-income earners and includes new spending on childcare and education, cuts that ratio by about 6 percentage points. .
These cuts are a far cry from Republican promises to balance the budget in 10 years after taking control of the House in November. That’s partly the result of excluding the rapidly rising Social Security and Medicare cost cuts that have succumbed to the onslaught of the US.
The dwindling ambition is that Republican leaders are unwilling to scrap most of the new spending programs Biden signed into law during his first two years in office, often with bipartisan support. , or is also the result of something that cannot be abolished.
On Monday at the New York Stock Exchange, McCarthy ignored the bipartisan support enjoyed by much of the spending Biden signed into law, blaming the president and his party for already putting “the burden on our nation’s debt burden.” He accused it of adding $6 trillion.
The chairman’s plan would effectively repeal one bipartisan appropriation bill Biden signed into law at the end of 2022 to fund the government this year. But other major drivers of debt approved under Biden not listed for withdrawal in the Republican bill include semiconductor manufacturing, medical care for veterans exposed to toxic burns, bridges and waterworks. including trillions of dollars in new spending on updating critical infrastructure such as pipe and broadband.
Some of that spending could potentially be cut by congressional expropriators working under the proposed spending cap, but much of it is exempt from the cap or is already out there. The $1.9 trillion economic aid plan signed in March 2021 also accuses Republicans of fueling high inflation, much of which has already been spent.
The plan is aimed squarely at the climate, health and tax bill that Democrats passed last summer along party lines, cutting energy subsidies on that bill. It also voids the extra enforcement dollars the law sent to the Internal Revenue Service to crack down on wealthy tax fraud. The Congressional Budget Office says the change will cost the government about $100 billion in tax revenue.
Taken together, these efforts would reduce the deficit by just over $100 billion, suggesting that debt levels are not the primary consideration covered by these provisions. The next 200 pages of the bill show the actual contents. It’s the continued pressure to tip federal support further from low-emission energy to fossil fuels. This includes mandating new oil and gas leases on federal land and reducing barriers to building new pipelines.
Republicans say these efforts will save consumers money by reducing gas and utility bills. Democrats say they will boost domestic manufacturing growth and halt progress on Biden’s efforts to fight climate change.
Rhode Island Senator Sheldon Whitehouse, the Democratic chairman of the budget committee, said the plan “will cost Americans trillions of dollars in climate damage.” “And by investing less in tomorrow’s technology, it will shrink our economy.”
Republicans see tackling fossil fuels as the solution to a possible production crisis in the United States. Alabama Rep. Jerry Karl said, “I have spent the past two years working with the other side of the aisle and watching them systematically tear this country apart when it comes to natural resources. said last month before passing the energy bill that is embedded in the debt ceiling bill.
Government statistics show an optimistic picture of the industry. oil production In the U.S., stocks have nearly returned to record highs under Biden.of energy sector projects Next year will be record-breaking, driven by increased production in Texas and New Mexico. natural gas production It’s never too expensive.
White House officials have warned that Republicans risk catastrophic default by calling for a higher borrowing limit. is to accept the threat of default, and we will be off the table when it comes to the economy and what it can do to the economy,” White House Press Secretary Carine Jean-Pierre told reporters on Thursday.
McCarthy has defended the entire set of demands as a complete package for reorienting economic policy. But he only mentioned energy in his Wall Street speech.
Fiscal policy and debt were the issues he called the crisis, and the reasons he cited for his refusal to raise the borrowing limit without conditions. Debt-limit negotiations are “an opportunity to look at our finances,” he said.
