House Republicans are preparing for a fight over the debt ceiling with the White House and Senate Democrats.
Republicans are at odds with the White House, which wants Congress to raise the debt ceiling without conditions.
If they fail to resolve their differences and default, the consequences could include a stock market crash, a recession, higher consumer interest rates, a weaker dollar, a downgrade of the United States’ credit rating, and a government unable to meet all of its obligations, from funding the military to providing Social Security benefits.
What exactly is the debt ceiling?
It is a legal limit that dates back to 1917 and limits the amount of debt that the federal government can incur. When the United States reaches the limit and has exhausted all other options for paying its bills, Congress must raise the ceiling in order for the government to continue borrowing to meet its obligations. If it does not, the country risks defaulting, which experts warn would be economically disastrous.
Republicans have fought heated battles over the debt ceiling in the past, most recently in 2011, but they have always been resolved on time.
The issue is poorly understood by the general public, and it is frequently misrepresented as a vote to spend more money, when it is simply about paying bills that the United States has legally imposed. Congress is unique in that it regularly votes to increase spending or cut taxes, both of which add to the debt, but it also must vote separately on whether the country should borrow to pay those bills.
When does the debt ceiling expire?
Officially, the United States is expected to reach its borrowing limit on Thursday. Following that, the Treasury Department will use “extraordinary measures” to keep paying bills, which is expected to last until “early June” when Congress must act, Treasury Secretary Janet Yellen said in a letter to McCarthy, R-Calif.
The national debt is estimated to be $31.4 trillion.
Why does a Republican-controlled House complicate debt-ceiling talks?
Conservative lawmakers claim that as part of their negotiations to give McCarthy the speakership, they obtained assurances that any debt limit increase would include significant spending cuts to balance the federal budget. To that end, they’ve secured additional rule changes that give a small group of members the authority to remove McCarthy.
However, Democrats, who control both the Senate and the White House, are unlikely to accept such cuts. They are also opposed to making policy concessions in order to raise the debt ceiling, particularly after a 2011 showdown during Barack Obama’s presidency, when a GOP House brought the United States to the brink of economic disaster and caused Standard & Poor’s to downgrade the country for the first time.
Republicans adopted new rules in the House last week that require an explicit vote to increase U.S. borrowing authority, eliminating an end run that Congress previously used to expedite it.
What do Republicans desire?
A wide range of things. So far, there is no specific set of demands, nor is there a document reflecting a consensus position within the party. As part of a debt ceiling increase, Republicans have proposed everything from budget cuts to socially conservative legislation.
McCarthy has stated that the debt ceiling is a litmus test for the GOP’s commitment to spending restraint. On Fox News on Sunday, he compared the United States government to a spendthrift child with a credit card limit that needs to be reduced.
“You couldn’t just keep raising it,” he said, urging Biden to negotiate budget cuts. “Let us sit down and change our ways for the sake of America. Because if we don’t change their behaviour today, we’re going to bankrupt this country and these entitlements.” (The most expensive programmes are Social Security and Medicare.)
Rep. Ralph Norman, R-South Carolina, has stated that any borrowing limit increase should be accompanied by dollar-for-dollar spending cuts. “Plus, we have to make some progress with the deficit we have.”
Rep. Chip Roy, R-Texas, has stated that he wants to reduce federal spending to fiscal year 2022 levels and balance the budget over a ten-year period. That’s a tall order: balancing the budget in a decade would necessitate massive spending cuts or tax increases, both of which would be unpopular in Congress.
“You only have so much leverage and negotiating points,” Roy said. One of these is the debt ceiling.”
Former Trump adviser Stephen Miller pointed to the debt ceiling and government funding bills as a way for the GOP to try to force Biden to cut money for the IRS and limit abortion rights.
What is the position of the White House and Democrats?
The White House had set a precedent: there would be no negotiations and no policy conditions attached to raising the debt ceiling.
“We’re not going to engage in any bargaining. And, once again, it should be done without conditions,” White House press secretary Karine Jean-Pierre told reporters Friday.
Legislative action necessitates GOP collaboration. Republicans control the House, so McCarthy gets to decide which bills get a floor vote. Democrats have a 51-seat majority in the Senate, but most legislation requires 60 votes to break a filibuster.
Senator Chuck Schumer of New York and House Minority Leader Hakeem Jeffries of New York issued a joint statement Friday warning that a “default forced by extreme MAGA Republicans could plunge the country into a deep recession.” “Democrats want to move quickly to pass legislation addressing the debt limit so there is no risk of a catastrophic default,” they added.
What is the position of moderate Republicans?
Some Republicans argue that default is not an option, but none have proposed the “clean” increase that Democrats want.
“I will tell you that our country will not default on its debt,” said Rep. Brian Fitzpatrick, R-Pa., co-chair of the bipartisan Problem Solvers Caucus. “The United States’ full faith and credit is what gives us our position in the world. So that’s out of the question. We’re not going to give up. We can’t afford to let ourselves down.”
Fitzpatrick stated that he is already discussing debt-ceiling options with Rep. Josh Gottheimer, D-NJ, the PSC’s Democratic co-chair.
Fitzpatrick suggested that Congress “tie it to some assurances that we’ll be responsible in trying to balance our budget.” He does, however, believe in a social safety net and believes that a 10-year timeline to eliminate red ink is “aggressive.”
Rep. Don Bacon, R-Neb., who represents a district won by Biden, said on ABC’s “This Week” Sunday that default is a “real threat” that both parties must address.
Republicans, he said, are determined to “control reckless spending,” but they must recognise that they cannot simply “dictate” terms to the Senate and White House. “He can’t say he doesn’t want to negotiate,” he insisted. That is also a nonstarter.”
Is it possible to avoid McCarthy?
If a “discharge petition” is required, lawmakers have discussed using it. To force a floor vote, a faction of House Republicans must end-run their party’s speaker — an extremely rare occurrence — and join forces with Democrats. If a majority of legislators sign it, the bill will be put to a vote in the chamber.
However, there are a number of limitations to using a discharge petition.
First, a bill must be held in committee for 30 legislative days (not calendar — and the House only has eight legislative days in February). Then 218 House signatures are required (meaning at least five Republicans plus Democrats). The bill must then be placed on the calendar for seven legislative days. The initiator can then compel the speaker to hold a vote within two legislative days.
Some moderate Republicans have kept the possibility of a discharge petition alive. “That bridge will be crossed when it comes,” Fitzpatrick said. “It’s one of several options.”
Conservative members, on the other hand, say no way.
“We’re going to fight it,” Norman declared.