As Americans deal with an economic hangover of high inflation and rising interest rates caused in large part by Washington’s irresponsible spending spree, House Republicans have delivered a legislative package to address these problems.
Troublingly, leading Democrats are making patently false claims that will make it more difficult for the two sides to find common ground.
The past week has been a whirlwind of activity for federal finances:
- On April 26, the House passed the Limit, Save, Grow Act, which would reduce deficits by over $4.8 trillion (roughly $37,000 per household) while raising the federal debt limit.
- On Monday, both the Congressional Budget Office and the Treasury Department stated that the federal government could reach the debt limit as soon as June 1. This is earlier than previous projections, due to higher-than-expected budget deficits this year.
- Later that day, the White House announced that President Joe Biden will meet with congressional leaders next Tuesday to discuss the debt limit. This marks a reversal of Biden’s previous refusal to negotiate, which included ignoring pleas from Sen. Joe Manchin, D-W.V., and centrist House Democrats that the president work with lawmakers across the aisle.
All parties involved agree that the ticking clock requires legislative action, although some important differences in priorities remain.
Reaching the debt limit’s so-called X date would disrupt federal operations, especially because the Treasury Department has no plan for how to prioritize payments within the vast array of federal agencies and programs. Some are concerned that the Treasury Department potentially could fail to make interest payments on the national debt, which likely would rattle financial markets.
Conservatives are focusing on the debt limit as an inflection point to address both ongoing and yet-to-come economic crises. Persistently high inflation, driven by massive federal deficits and spending, is hammering families across the country.
Major programs such as Social Security are on a fast track to bankruptcy, meaning that deficits and resultant inflationary pressure will get worse in the future unless Congress acts soon.
Although the meeting scheduled for Tuesday at the White House presents the possibility of opening bipartisan negotiations over pairing a debt limit increase with badly needed fiscal reforms, Americans have reasons to be skeptical that Biden and Senate Majority Leader Chuck Schumer, D-N.Y., are acting in good faith. Among them:
- Biden and Schumer immediately were dismissive of House Republicans’ Limit, Save, Grow Act. Although it isn’t surprising that a legislative package packed with policies favored by conservatives would get opposition from Democrats, both Biden and Schumer grounded their objections in insistence that the debt limit increase be “clean”—that is, without accompanying spending reductions.
This insistence ignores the fact that many bipartisan deficit reduction deals have been paired with the debt limit over the years and that such reforms primarily happen when prompted by the debt limit. There’s no reason why Congress can’t do the same thing again.
- Beyond objecting to the deficit reduction package in general, leading Democrats have used misleading claims to demagogue House Republicans’ proposed reduction to annual spending levels. Republicans seek to reduce appropriated spending to fiscal year 2022 levels, which would result in Congress needing to prioritize how to spend within that lower amount.
Unfortunately, Democrats now claim that lowering the top-line amount would automatically cut veterans’ care, rail safety, and more. This is simply not how the annual spending process works, since Congress still would need to decide how funds are allocated and could channel funds toward these and other needs that the American people rightly consider top priorities. Republicans have been adamant that veterans will not face cuts in benefits, and Congress has hundreds of ways to reduce spending without damaging core federal responsibilities.
On top of this, Democrats claim that priorities such as care for veterans would face a 22% cut, but such statements are based on bad math.
- Schumer is demanding that any increase in the debt limit extend until December 2024, as opposed to the House package extension until spring 2024. Schumer knows that Congress has a bad habit of passing bloated omnibus spending packages (“Christmas trees”) at the end of the year, especially after an election.
Such packages often are paired with naughty surprises such as debt limit hikes and special interest handouts, because lawmakers assume that the public will be too busy with holiday plans to notice the trickery.
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We can expect more heated rhetoric before the two sides meet Tuesday at the White House, and there is no telling what (if anything) the discussion will produce.
Democrats will keep up a steady drumbeat of demands that House Speaker Kevin McCarthy, R-Calif., fold and allow the national debt to continue its meteoric rise without any policy reforms. However, polls show that the public wants Biden to compromise and agree to bring down excessive spending.
It’s vital for congressional Republicans to stand their ground. Rather than sending America barreling down the road of unlimited debt and continual economic instability, Washington must tap the brakes on runaway spending with a long-overdue attempt at real budgeting.
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