WASHINGTON — Speaker Kevin McCarthy of California has said repeatedly that he and his fellow House Republicans are refusing to raise the country’s borrowing limit and risk economic catastrophe to force a $31 trillion settlement of the US national debt.
“It is no exaggeration that the US debt is a ticking time bomb that will explode unless we take serious, responsible action,” he said this week.
But the bill Mr. McCarthy introduced on Wednesday would only modestly change the nation’s debt trajectory. It also has a second major objective that has little to do with debt: undermining President Biden’s climate and clean energy agenda and increasing US fossil fuel production.
The legislation, which Republicans are due to vote on next week, is designed to force Mr Biden to negotiate raising the debt limit, which is currently capped at $31.4 trillion. Unless the limit is lifted, the federal government – which is borrowing huge sums of money to pay its bills – is expected to run out of money as early as June. The House Rules Committee said on Friday it will meet on Tuesday to discuss the bill and possibly send it to a floor vote.
More than half of the 320-page bill is a repetition of a utility bill Republicans passed this year that was designed to speed up the hiring and permitting of oil and gas drilling. Republicans argue the bill would boost economic growth and bring more revenue to the federal government, though the Congressional Budget Office predicted it would lose some revenue.
The Republican plan also prioritizes removing clean energy incentives that were included in Mr Biden’s signature climate, health and tax legislation. That legislation, known as the Inflation Reduction Act, included tax credits and other provisions designed to boost electric vehicle sales, advanced battery manufacturing, utility upgrades and a variety of energy efficiency efforts.
The proposal includes provisions that would meaningfully reduce government spending and deficits, specifically by capping the aggregate growth of certain types of federal spending from 2022 levels.
The bill would reclaim some unused Covid relief money and impose new job requirements that could reduce federal spending on Medicaid and food aid. It would block Mr Biden’s proposal to cancel hundreds of billions of dollars in student loan debt and a related plan to reduce loan payments for low-income graduates.
As a result, deficits would be reduced by as much as $4.5 trillion over those 10 years, according to calculations by the Committee for a Responsible Federal Budget in Washington. The actual number could be much smaller; lawmakers could vote in the future to override spending caps, as they have in the past.
Even if all of the plan’s estimated savings were realized, ten years from now the country would still have total debt greater than the economy’s annual output — a level that Mr. McCarthy and other Republicans often refer to as a level labeled. crisis.
The Republican plan is estimated to reduce that ratio — known as debt-to-GDP — by about nine percentage points by 2033 if fully implemented. In contrast, Mr. Biden’s latest budget, which collects trillions of dollars in new taxes from corporations and high earners and includes new spending on childcare and education, would lower the ratio by about six percentage points.
Those cuts are a far cry from Republicans’ promises, after winning control of the House in November, to balance the budget in 10 years. That reduction in ambitions is in part the product of Republican leaders ruling out cuts to the rapidly rising costs of Social Security or Medicare, bowing to an onslaught of political attacks from Mr. Biden.
The lower ambitions are also a result of party leaders’ unwillingness or inability to repeal most of the new spending programs Mr Biden signed into law in the first two years of his presidency, often with bipartisan support.
At the New York Stock Exchange on Monday, Mr. McCarthy accused the president and his party of already “adding $6 trillion to our nation’s debt burden,” ignoring the bipartisan support enjoyed by most of Mr. Biden signed into law.
The speaker’s plan would effectively reverse one big bipartisan spending bill, which Mr Biden signed in late 2022 to fund the government this year. But the other big debt drivers approved under Biden that have not been singled out for repeal in the Republican bill are trillions of new spending on semiconductor manufacturing, healthcare for veterans exposed to toxic fire pits, and critical infrastructure upgrades. such as bridges, water pipes and broadband.
Some of that spending could potentially be reduced by convention proprietors operating under the proposed spending limits, but much of it is either exempt from the cap or already out the door. Most of the $1.9 trillion economic relief plan that Biden signed in March 2021, which Republicans blame for fueling high inflation, has also already been spent.
The plan directly targets the climate, health and tax bill that Democrats passed along party lines last summer by cutting energy subsidies from that bill. It would also revoke additional enforcement dollars that the law sent to the Internal Revenue Service to crack down on wealthy tax evaders. The Congressional Budget Office says change would cost the government about $100 billion in tax revenue.
Taken together, these efforts reduce deficits by just over $100 billion, suggesting that debt levels are not the primary consideration when targeting those provisions. The next 200 pages of the bill show what it really is: a continued push to tilt federal aid away from low-emission energy and on to fossil fuels, including mandating new oil and gas leasing on federal lands and reducing barriers to the construction of new pipelines.
Republicans say those efforts would save consumers money by reducing gas and heating costs. Democrats say they will halt progress in Mr Biden’s efforts to boost domestic manufacturing growth and fight climate change.
The plan “would cost Americans trillions in climate damage,” said Sen. Sheldon Whitehouse of Rhode Island, the Democratic chairman of the budget committee. “And it would shrink our economy by disinvesting in the technologies of tomorrow.”
Republicans have positioned their fossil fuel efforts as a solution to a perceived manufacturing crisis in the United States. “I’ve worked across the aisle for the past two years, watching them systematically tear this country apart when it comes to our natural resources,” Alabama Representative Jerry Carl said last month before voting to get the utility bill right. which is now embedded in the debt ceiling.
Government statistics paint a rosier picture for the industry. Oil production in the United States has almost returned to record highs under Biden. The Energy Department predicts next year will break records, led by increases in production from Texas and New Mexico. Natural gas production has never been higher.
White House officials are warning that Republicans risk catastrophic bankruptcy with their demands related to raising the borrowing ceiling. “The way to really negotiate the budget is for House Republicans to take the threat of default off the table, when it comes to the economy and what the potential could do for the economy,” said Karine Jean-Pierre, the White House. press secretary, told reporters on Thursday.
Mr McCarthy has defended his whole set of demands as a complete package to refocus economic policy. But he only mentioned energy in passing in his address to Wall Street.
The issue he called a crisis — and the basis he cited for refusing to raise the borrowing limit without conditions — was fiscal policy and debt. Debt limit negotiations, he said, “are an opportunity to examine our country’s finances.”
