The Washington Post

In debt ceiling debate, GOP gives an ultimatum


A powerful group of far-right 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 (R-PA.) — threatened to deal a massive blow to government health-care, education, science and labor programs. Seeking tougher work requiremen­ts on 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 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 far-right 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. They also targeted the roughly $80 billion recently approved to help the IRS pursue tax cheats, arguing it empowers the government to target innocent Americans. That move could add to the deficit, however, since it could prevent Washington from collecting money it is owed.

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 antipovert­y 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. Speaking at the White House later Friday, the president took aim at conservati­ves’ latest requests: He said it showed the “value set” the GOP had and predicted the impacts would fall hardest on police officers, firefighte­rs and the nation’s health care.

“I don’t know [if ] there’s much to negotiate on,” Biden said.

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 does not 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 H. Powell, the chair 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. The central bank will meet later this month to decide its next interest rate move.

At the White House, Biden on Thursday put forward his longawaite­d budget for the 2024 fiscal year, proposing more than $2 trillion in sweeping new social policy initiative­s along with a slew of new tax increases, largely targeting corporatio­ns and the wealthy. While the president’s plan would add roughly $1.8 trillion to the deficit next fiscal year, it would reduce the government’s imbalance by nearly $3 trillion over the next decade.

The slew of developmen­ts only appeared to embolden Republican­s, who have blamed Biden and his spending policies for the high price of consumer goods — even though both parties have contribute­d substantia­lly to the nation’s debt, and even though much of the spending in response to the pandemic was approved on a bipartisan basis. GOP lawmakers reserved their fiercest criticism for the president’s 2024 budget, arguing the White House did not go far enough to meaningful­ly address the country’s debt, especially after the nonpartisa­n Congressio­nal Budget Office last month predicted the federal shortfall is likely to surge by $19 trillion over the next 10 years.

“It’s a scam. It’s a reckless proposal,” said Rep. Earl L. “Buddy” Carter (R- Ga.), a member of the House Freedom Caucus, in an interview Thursday. “I think what it does is to reinforce the fact that we need to demand spending cuts because [Biden] is not going to make them.”

Republican­s hope to release their own spending plan later this spring, aiming to identify roughly $130 billion in cuts for the 2024 fiscal year. Rep. Jodey Arrington (R-tex.), the chairman of the House Budget Committee, reiterated in a recent interview that the reductions would come from nondefense programs while preserving spending at the Pentagon. Arrington added that lawmakers are also at work in identifyin­g hard caps on domestic agencies that would constrain their spending in future fiscal years.

“You’re going to see the conference coalesce around a set of fiscal restructur­ing and spending controls and savings, and I think that’s going to happen in the near future,” he said.

Yet some conservati­ves still have pushed their party to go further — and pursue steeper reductions targeting federal health care, education, labor and science-related agencies. On Friday, the House Freedom Caucus even called on Congress to pass an emergency backstop: A spending plan that would automatica­lly cut government even deeper, to levels adopted in the 2019 fiscal year, which would take effect if lawmakers could not reach a broader deal.

“We have to go over the $200 billion mark to make a difference,” Rep. Ralph Norman (R-S.C.), another caucus member, said in a recent interview while pledging to strip “woke dollars” from the federal ledger.

The demands illustrate­d anew the delicate task ahead for House Speaker Kevin Mccarthy (R- Calif.), whose election to the chamber’s top leadership post in January exposed the political fissures in his new, razor-thin majority. Even as Republican­s have presented a united front to the White House — demanding that Biden accept spending cuts in exchange for their votes on the debt ceiling — GOP lawmakers have yet to rally around a single set of demands.

A senior moderate Republican in the House, who spoke on the condition of anonymity to talk freely about the party’s internal dynamics, described the conservati­ves’ ultimatum on Friday as unhelpful while talks continue among the GOP’S leaders and competing factions. Perry, meanwhile, later said he is “pretty optimistic” that other Republican­s might support his caucus’s plans.

In a sign that they plan to drive a hard line in talks, Republican­s readied a bill earlier this week that would prepare the government in the event of a default. The measure, which the tax-focused Ways and Means Committee sent to the full House, essentiall­y would prioritize some federal payments over others in the event the United States no longer had the authority to borrow.

The panel’s chairman, Rep. Jason T. Smith (R-MO.), said the approach would allow the country to pay its creditors, assuage bond markets and preserve benefits for seniors on Social Security. But Democrats said that it would eliminate funding for entire programs, from dollars to help hungry families to hurricane disaster aid. Yellen, meanwhile, blasted the idea Friday during her appearance before Smith’s committee — stressing it would not serve as a “shortcut” that averts the worst consequenc­es of default.

“Prioritiza­tion is simply not paying all of the government’s bills when they come due,” she told lawmakers.

 ?? J. SCOTT APPLEWHITE/AP ?? Rep. Scott Perry (R-PA.), center, and members of the House Freedom Caucus at the Capitol on Friday. Perry is leading the charge on conservati­ves’ spending ultimatum in talks to raise the U.S. debt ceiling.
J. SCOTT APPLEWHITE/AP Rep. Scott Perry (R-PA.), center, and members of the House Freedom Caucus at the Capitol on Friday. Perry is leading the charge on conservati­ves’ spending ultimatum in talks to raise the U.S. debt ceiling.

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