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What’s in the GOP House Debt Limit Act

    WASHINGTON — Republicans in the House of Representatives unveiled a bill on Wednesday that would cut billions in federal spending and reverse some of President Biden’s policy priorities in exchange for lifting the debt ceiling for a year.

    After trying to get lawmakers around a budget blueprint of their own but failing, Republican leaders instead crafted the legislation as an opening bid to Democrats and a way to bring the White House to the negotiating table.

    Mr Biden has pushed for Republicans to raise the debt limit without any conditions and said he would not meet with them to discuss spending cuts until they have approved their own budget plan.

    Speaker Kevin McCarthy said he would put the new legislation, which Republicans say would save the nation $4.5 trillion, to a vote next week.

    Negotiations are so far frozen and time is running out: The United States, which has already hit a $31.4 trillion cap on how much money it can borrow, could run out of money to pay its bills as early as June .

    That could have catastrophic consequences, possibly leading to a global financial crisis and a painful recession in the United States.

    While the two sides could start talks soon, Mr Biden is unlikely to accept any or any proposals from Mr McCarthy. See what’s in the bill here.

    Republicans proposed withdrawing pandemic relief funds that have not yet been spent, which they estimate would return about $50 billion to $60 billion to the government’s coffers.

    In 2020 and 2021, Congress approved approximately $4.6 trillion in stimulus funding designed to help the country recover from the effects of the coronavirus pandemic. Most of that money has been spent.

    But there is some money left over for programs that provide grants to health care providers, medical care for veterans, retirement benefits, and assistance for public transportation companies. Some programs have not spent money because applications are still open or their funds don’t expire until next year. Others, including one devised to help aircraft manufacturers pay compensation costs, are not expected to use all of their allocated resources.

    Biden administration officials have reversed the effort, as they expect a majority of the unused relief funds to be used before they expire.

    House Republicans have long complained that federal spending is out of control, and the conference started the year with an ambition to balance the budget in 10 years. But that would require major cuts to popular federal programs, something GOP leaders have been unable to coalesce their conference around. The bill instead aims to reassure Conservatives by proposing to freeze spending to last year’s levels.

    That would in effect force cuts. Since the cost of government programs increases over time with inflation, lawmakers would have to cut some programs to stay below the cap. That would require Republicans to identify cuts totaling $3.6 trillion over a ten-year period, by their own calculations, and this bill doesn’t reflect them. Instead, House Republican leaders take those decisions to the Appropriations Committee.

    One battle that proprietors will have to resolve is how to balance the cuts between defense-related spending and spending on other domestic programs, such as environmental protection and education. House Republicans, in particular, resent any cuts in military spending, but keeping those budgets intact would require stronger cuts in other programs.

    Democrats have tried to make that part of the proposal politically toxic. They released a memo Thursday accusing Republicans of trying to kill manufacturing jobs by cutting government subsidies for low-emission energy technology.

    Karine Jean-Pierre, the White House press secretary, said in a briefing that the White House was still reviewing the plan, but called it broadly unserious and harmful to Americans “who struggle every day to make ends meet.” knots”.

    Even if Republicans succeeded in enforcing the caps, there’s no guarantee they’ll get anywhere near the promised savings. Lawmakers in the future could simply vote to ignore them, as they often did with the spending caps that President Barack Obama and Republicans in Congress agreed to avoid a default in 2011.

    The bill would undo large parts of the Biden administration’s groundbreaking health, climate and tax bill, which Democrats passed last year and dubbed the Inflation Reduction Act.

    Republicans proposed repealing a series of energy tax credits in law aimed at reducing greenhouse gas emissions, including those that encourage the use of previously owned electric vehicles and incentivize the production of clean electricity and fuel. Republican lawmakers claim the move would save about $271 billion to $1.2 trillion.

    The Republican plan also includes proposals in a separate energy bill that House GOP lawmakers passed last month to bolster domestic energy production. While that bill failed to pass the Democratic-controlled Senate, it contains provisions that would expand mining and fossil fuel production in the country and accelerate construction of necessary infrastructure by reforming a permitting process that could take up to five years.

    Republicans also vowed to “defund Biden’s IRS army” by withdrawing most of the new funding the tax collection agency had been given to improve customer service and crack down on tax evaders.

    The Inflation Reduction Act approved $80 billion in additional funding for the IRS, which has struggled to address tax backlogs and answer taxpayer calls due to dwindling resources over the years.

    The funding has come under intense scrutiny from conservatives, who claim it will be used to boost audit rates for the average taxpayer. IRS officials have reiterated that they will not raise audit rates above “historic levels” for taxpayers earning less than $400,000 a year and will focus on increasing compliance by large corporations and wealthy people.

    Cutting that spending would actually add to the federal deficits, the Congressional Budget Office estimated. That’s because the money is expected to help the IRS crack down on taxpayers who don’t pay what they owe — generating an estimated $200 billion in new revenue over a decade. That revenue would be lost if the funding is taken away.

    The proposal would establish tougher job requirements for recipients of food stamps and Medicaid benefits, which Republicans say would draw more people into the workforce and save about $110 billion to $120 billion. Republican leaders backed away from pursuing tougher demands after lawmakers facing challenging re-election battles in swing districts raised concerns.

    The measure would subject able-bodied adults with no dependents who receive both federal food aid and Medicaid benefits to work requirements until they are 55 years old, raising the current age from 49. It also seeks to close a loophole. Republicans have argued that states are abusing , allowing officials to exempt food aid recipients from work requirements.

    The bill would reverse the Biden administration’s actions to forgive up to $20,000 in student loan debt for millions of borrowers earning less than $125,000 a year. The move would wipe out more than $400 billion in debt, though the Supreme Court’s conservative majority appeared highly skeptical about the legality of the plan ahead of an expected June ruling.

    Republicans would also block a second student loan amendment announced by the Department of Education, which would cut payments for prospective borrowers who earn relatively low incomes after college. The department has estimated that the plan would cost more than $100 billion over a decade, though the University of Pennsylvania’s Penn Wharton Budget Model puts the cost at about $350 billion.

    In exchange for the cuts and policy changes, Republicans would impose a legal cap on how much the United States can borrow until March 2024, or until the national debt grows to $32.9 trillion.

    That length of the extension would be much shorter than Mr. Biden would prefer, guaranteeing another confrontation with the economy as the presidential campaign heats up next year.

    The United States could pay off its debts if both sides fail to reach an agreement. That could potentially lead to a financial crisis, hurt economic output and trigger a deep recession if the country is unable to pay all its bills on time.

    Among other things, the country may not be able to pay salaries for federal employees or Social Security checks. A default can also have global repercussions and destabilize bond markets around the world, as U.S. Treasury bonds are generally seen as one of the safest investments.

    Chris Cameron reporting contributed.