McCarthy proposes to increase the debt ceiling if spending cuts are made
The Problem of Dealing With The Government’s Technical Debt: How Congress Meticulously Overcame the “Censorship Problem”
But it’s unclear McCarthy can maneuver a debt bill through the House with such a thin majority. Some moderates might be hesitant to support work requirements that are added to federal assistance programs. McCarthy acknowledged his rough path to obtaining the votes to be elected speaker 100 days ago in his speech on Monday. Conservatives initially opposed McCarthy because they were not sure if the House would vote on a stand-alone measure to lift the debt limit. House Republicans are still trying to come up with a budget and McCarthy decided to propose a debt proposal in order to force the president to negotiate.
There’s a limit on how much the U.S. can borrow. According to the Constitution, Congress must authorize borrowing. The debt limit was instituted in the early 20th century so that the Treasury would not need to ask for permission each time it had to issue debt to pay bills.
The limit has been hit. What are we doing now? The technical debt limit was hit by America. The Treasury Department will be using so-called “extraordinary measures” to keep making payments. These measures are essentially fiscal accounting tools that curb certain government investments so that the bills continue to be paid. Those options could be exhausted by June.
What is at stake? Once the government exhausts its extraordinary measures and runs out of cash, it would be unable to issue new debt and pay its bills. The government could wind up defaulting on its debt if it is unable to make required payments to its bondholders. A scenario like that would cause the globe to plunge into a financial crisis.
Can the government do anything to save lives? There is no official playbook for what Washington can do. But options do exist. The Treasury could try to prioritize payments, such as paying bondholders first. The Federal reserve could possibly buy some of the Treasury bonds if the United States does default on its debt.
What is the problem with the debt crisis? President Biden and House Minority Leader Hakeem Jeffries have threatened to vote against a budget proposal that would devastate families
McCarthy warned in a speech at the New York Stock Exchange that American debt is a “ticking time bomb” that needs to be stopped.
President Biden for weeks has said House Republicans should present a budget proposal before he agrees to another meeting with McCarthy to negotiate any compromise. He also says any debate on federal spending should take place around the debate this fall on spending bills, not around a measure to increase the debt ceiling.
The speaker complained about the president’s posture, saying “enough is enough” and vowing House Republicans would act on their own. This is not the way a leader of the free world should act. You claim to want to avoid a crisis such as greater reliance on China, inflation, and threatening Medicare and Social Security because of your partisan political games.
The speaker repeated a claim he makes often that Democrats are to blame for the trillions in federal debt, but spending policies and tax proposals from both Republican and Democratic administrations over decades contributed to the current national debt level.
The speaker noted Monday that as a Senator, Biden was in favor of attaching spending reforms to lift the debt ceiling.
McCarthy also said the bill would claw back unspent federal funds earmarked to respond to the pandemic, now that the President signed Republican legislation ending the federal emergency to the public health crisis.
House Republicans plan to make it necessary for adults without dependents to have jobs when they enroll in federal assistance programs. “Incentives matter. And the incentives today are out of whack,” McCarthy said.
Christie Stephenson, spokeswoman for House Minority leader Hakeem Jeffries, D-N.Y., said Democrats will evaluate the bill “if House Republicans can ever agree with themselves about how much they want to devastate American families in order to finance tax cuts for the wealthy, well-off and well-connected.”
Schumer told reporters after McCarthy’s speech that what they got was a recycled pile of the same things he’s been saying for months. There was nothing that moved the ball forward an inch.
Andrew was quoted as saying in a statement that McCarthy failed to clearly state what the House Republicans are proposing and will vote on, even as he mentioned a vague, extreme example of an extreme agenda that would hurt hard-working families.
Analysts at the Peterson Institute for International Economics warn that there are national security implications if Congress fails to increase the credit limit to pay the bills it has already incurred. A fact sheet distributed by the group suggests it could boost China and Russia and also cause “irreparable doubt among our closest allies not just about US financial commitments, but about any promises we have made to other countries.”
