McCarthy: Budget Restraint Is ‘Debate That’s Not Happening in Washington’

House Republicans are calling for major fiscal reforms in exchange for raising the debt ceiling through May of 2024. Majority Leader Kevin McCarthy (R-Calif.) laid out his case on Monday at the New York Stock Exchange, choosing that location because he said a discussion over the national debt is “the debate that’s not happening in Washington — but should be happening.”

The U.S. federal government reached its official debt limit of $31.4 trillion on January 19 of this year. “That is more than the size of the entire American economy. Twenty percent more,” said McCarthy. “That is unsustainable. … Without exaggeration, America’s debt is a ticking time bomb that will detonate unless we take serious, responsible action.”

The Treasury is currently taking “extraordinary measures” to avoid a default. In February, the Congressional Budget Office (CBO) predicted that the government’s ability to use these measures would be exhausted between July and September 2023 (exactly when will depend on the government’s Tax Weekend revenue, among other factors), leading to a default or delay in debt payments.

“Defaulting on our debt is not an option,” McCarthy insisted. “But neither is a future of higher taxes, higher interest rates, higher inflation, more dependence on China, and an economy that doesn’t work for working Americans.”

Democrats in Washington want a “clean” bill to increase the debt limit, which means a bill that would increase the debt limit without other provisions. But McCarthy responded that “a no-strings-attached debt limit increase cannot pass.”

“Let me put it this way,” McCarthy explained. “If you gave your child a credit card and they kept maxing out the limit, would you just blindly raise the limit? Of course not. You would be responsible and pay the bills — but you would also sit down with them to help figure out where they could change their spending behavior so it never happens again. The same thing is true for our national debt.” He pointed out that, as a senator, Biden voted four times from 1985-1997 for debt limit increases with spending reforms attached.

But McCarthy complained that President Biden seems far less interested in such a “compromise” agreement. McCarthy and Biden met on February 1, shortly after the government hit its debt limit, to open negotiations on a path forward. “Unfortunately, I haven’t heard from the White House since our first meeting. President Biden has been missing in action and misleading the public,” McCarthy said.

Five weeks after that February 1 meeting, the White House released an unilateral budget proposal, which McCarthy immediately labelled “completely unserious,” that proposed annual deficits of $1.5 trillion or more. Biden also claimed in his February 7 State of the Union address that “Republicans say if we don’t cut Social Security and Medicare, they’ll let America default on its debt for the first time in our history.”

“In the coming weeks, the House will vote on a bill to lift the debt ceiling into next year, save taxpayers trillions of dollars, make us less dependent on China, and curb high inflation — all without touching Social Security or Medicare,” said McCarthy. The speaker endorsed a plan that “puts us on a responsible fiscal path in three ways: limit, save, and grow.”

McCarthy elaborated that he wanted to:

• “Limit the growth of spending over the next 10 years to 1 percent annual growth.”
• “Examine wasteful Washington spending and executive overreach in all its forms” and “claw back tens of billions of dollars in unspent COVID-related money.”
• “Grow the economy so we stop being dependent on China.”

So far, the House GOP hasn’t introduced an FY 2024 budget resolution, according to Punchbowl, but “the GOP leadership is making the argument that McCarthy’s hand will be strengthened in any upcoming talks with Biden if he can move a bill through the House.” Earlier this year, the Republican Study Committee (RSC) released a document containing a seven-page “policy menu” of possible bullet points to write into the budget resolution.

One of McCarthy’s policy proposals has already encountered opposition. His plan, he said, would “include restoring work requirements that ensure able-bodied adults without dependents earn a paycheck and learn new skills.” In addition to convincing the Biden administration to go along, McCarthy would also have to persuade the Democrat-controlled Senate. Senator John Boozman (R-Ark.) said that policy “would be difficult to pass in the Senate with 60 votes.”

McCarthy will have to contend with vigorous opposition from the mainstream media, too. In the first sentence of its article reporting on the Californian’s speech, The Washington Post alleged that McCarthy “labored to sell Wall Street on a risky fiscal showdown with the White House that could unleash vast economic turmoil.”

“The media has covered the debate surrounding the debt limit with irrational shock and horror. Democrats and their pundit allies have painted Republican efforts to pair budget reforms with legislation increasing the debt limit as reckless and irresponsible,” RSC Chairman Kevin Hern (R-Okla.) said in a January 19 letter to colleagues. “In fact, numerous major bi-partisan reforms to rein in spending have been made in conjunction with raising the debt limit. … There is no more appropriate time to address our nation’s finances than when the bill comes due.”

Hern concluded, “The only reckless assumption Congress can make about our nation’s debt crisis is that the status quo is sustainable.”