This week, Speaker McCarthy released his proposal for addressing the federal debt limit, including several spending and policy priorities that are ‘non-starters’ for President Biden and the Democratic-controlled Senate. The GOP proposal seeks to raise the debt limit by $1.5 trillion or by March 31, 2024, whichever comes first in exchange for a series of budget cuts and policy changes. The House GOP plan proposes discretionary spending caps at fiscal 2022 levels while limiting growth to one percent annually over the next decade. With current inflation rates, the proposal’s discretionary spending cap would result in a net spending decrease.
The House Republicans are not proposing defense spending reductions and have also publicly rejected cuts to entitlements, such as Social Security and Medicare. The only remaining budget items for reduction are discretionary spending, which includes environmental protection, climate control, research, science, and non-defense technology.
Speaker McCarthy is planning to bring the GOP debt proposal to the House floor for a vote next week. With likely all Democratic House members opposed; Speaker McCarthy can only lose four Republican votes before the budget proposal fails.
The GOP plan is only the first of what will likely be many debt ceiling plans that are announced over the coming weeks. To date, the White House and Congressional Democratic leadership have insisted that Congress pass a clean measure to raise the debt ceiling, with negotiations over government spending to be handled separately. The federal government is predicted to hit the debt ceiling by summer. Without a debt ceiling increase, the U.S. government will no longer be able to borrow money to fund government operations.