HOUSE REPUBLICANS DEMAND SPENDING CUTS
Freedom Caucus seeks $130B in cuts in debt limit dispute
A powerful group of farright Republicans on Friday issued a new set of demands in the fight over the debt ceiling, stressing they may only supply their votes to raise the limit if they can secure about $130 billion in spending cuts, cap federal agencies’ future budgets and unwind the Biden administration’s economic agenda.
The ultimatum from the House Freedom Caucus — led by Rep. Scott Perry, RPa. — threatened to deal a massive blow to government health care, education, science and labor programs. Seeking tougher work requirements for welfare recipients and the repeal of federal funds to fight the coronavirus and climate change, the conservatives’ wish list appeared to complicate efforts to clinch a deal and avert a looming fiscal calamity.
At the heart of the political standoff is the debt ceiling, the legal limit on how much the U.S. government can borrow to pay for spending that policymakers in both parties have already approved. Congress must raise or suspend the current $31 trillion cap as soon as this summer or risk a default,
an unprecedented crisis that could rattle markets globally while triggering a potential recession in the United States.
But Republicans have promised to use the fast-approaching deadline to extract fiscal changes from the White House, many of which target President Joe Biden’s signature economic priorities. Appearing at a news conference, Perry said the goal is to “shrink Washington,” and added: “Doing this will lower dollar for dollar the amount needed for any increase in the debt ceiling.”
The caucus called for clawing back nearly $400 billion to boost clean energy and combat pollution in the Inflation Reduction Act, for example, and an end to the “student loan bailout,” as Perry described it, referring to the president’s debt cancellation
measure, which is awaiting a Supreme Court ruling.
Conservatives further pushed for regulatory reform legislation, while emphasizing the need for tougher work requirements on food stamps, Medicaid and other programs that aim to help low-income Americans. Democrats contend these efforts could result in millions of deserving families being forced off federal benefits, since a wide array of federal anti-poverty initiatives already require beneficiaries to seek employment.
The demands served as a direct challenge to Biden, who has repeatedly pledged he will not haggle with Republicans over the country’s credit.
Treasury Secretary Janet L. Yellen, meanwhile, appeared Friday on Capitol Hill to deliver her own urgent plea for action, citing the catastrophic ramifications if Congress fails to raise the debt limit in time.
Appearing before the House Ways and Means Committee, she reminded lawmakers that the government has never defaulted — and doing so would “trigger an economic and financial catastrophe.”
The intensifying political stalemate capped off a week of mixed economic news in an ever-divided Washington. It began with a fresh warning from Jerome Powell, the chairman of the Federal Reserve, who on Wednesday signaled the central bank may have to raise interest rates more aggressively to keep tamping down inflation.
Such a move could help lower prices by raising the cost of borrowing, at the risk of squeezing spending and investment in ways that could leave Americans out of work.
Two days later, the government reported that the country added about 311,000 jobs in February, though the unemployment rate still ticked up to 3.6 percent. Taken together, the new indicators raised fresh uncertainty as to how the Fed might respond to the next round of federal inflation data due next week.