Topline
House Speaker Kevin McCarthy (R-Calif.) introduced legislation Wednesday to increase the debt ceiling ahead of a looming summer deadline before the federal government reaches its borrowing limit, but the bill is dead-on-arrival in the Democratic-controlled Senate and might not even have enough Republican support to pass the House.
Speaker of the House Kevin McCarthy (R-CA) is surrounded by reporters after he leaves the House … [+]
Key Facts
McCarthy’s bill would increase the debt limit by $1.5 trillion through March of next year, cut federal funding by $130 billion in fiscal year 2024, reverse spending to fiscal year 2022 levels and limit future budget growth to 1% per year.
The legislation would also repeal money included in the Inflation Reduction Act to fund the Internal Revenue Service—which has become a target for Republicans who claim without evidence the agency will use the funds to hire new tax agents to police average Americans for tax violations.
The proposal would also raise the maximum age for work requirements for welfare recipients from 49 to 56.
President Joe Biden, who has repeatedly said he refuses to agree to anything but a clean debt ceiling bill without other issues attached to the legislation, blasted the proposal in an economic speech on Wednesday from Maryland, where he accused “MAGA Republicans in Congress” of “threatening to default on the national debt . . . unless I agree to all these whacko notions they have.”
The bill is really just a Republican wish list, however—Democratic leaders in the Senate said it has no chance of passing, and Biden has repeatedly said he will not negotiate on raising the debt ceiling.
It’s unclear if the legislation has the support of enough Republicans to clear its first legislative threshold in passing the House, where a secondary proposal is being floated by moderates that includes suspending the debt ceiling through the end of the year, without conditions, in exchange for budget reforms and new long-term deficit controls.
What We Don’t Know
When the US will reach its $31.4 trillion borrowing threshold. Goldman Sachs sent a memo Tuesday predicting the federal government could reach the debt ceiling as early as June, based on weak tax collections so far in April. The Congressional Budget Office initially forecasted a July-August deadline.
Key Background
The federal government officially reached its borrowing cap in January, triggering “extraordinary measures” by the Treasury Department to stave off a default, which included suspending new investments in federal employees’ retiree accounts. McCarthy and Biden have been at an impasse over raising the debt ceiling for months and have not met to discuss the issue since February. The White House has repeatedly said it will refuse to negotiate and has instead pushed lawmakers to deal with spending cuts in the budget process.
Further Reading
Debt Limit Showdown: How The Upcoming Negotiations Could Play Out In Congress (Forbes)
Debt Ceiling Battle: Bipartisan Negotiators Propose Tying Debt Limit To GDP As White House Prepares To Meet With McCarthy (Forbes)
Federal Government Officially Reaches Debt Limit, Triggering ‘Extraordinary Measures’ To Prevent A Default—Here’s What That Means (Forbes)
Source: https://www.forbes.com/sites/saradorn/2023/04/19/mccarthy-unveils-bill-to-increase-debt-limit-through-2024-while-biden-blasts-long-shot-proposal-as-whacko/