Summarized from Jade West, chief government relations officer, National Association of Wholesaler-Distributors
The past few months have seen House Republicans and President Joe Biden exchange political broadsides over the debt ceiling with virtually no real negotiation taking place. Republicans have called for raising the debt ceiling in combination with spending cuts and regulatory reform while the president has insisted on a clean debt ceiling increase free of cost-cutting policies. Both sides have accused the other of being irresponsible and threatening to default on the debt, yet both sides have not met in person in months. In an attempt to put pressure on Biden to negotiate, House Republicans in April released their first legislative proposal to raise the debt ceiling and reduce government spending.
The legislation raises the debt ceiling through either March 31, 2024, or the accumulation of $1.5 trillion in new debt, whichever comes first. In exchange, the bill establishes a cap on discretionary spending at Fiscal Year 2022 levels and limits spending growth to 1 percent per year through Fiscal Year 2033.
The proposal also contains several Republican priorities, including rescinding unobligated COVID-19 federal spending; blocking President Biden’s proposal to forgive up to $20,000 in student loan debt; repealing green energy tax credits and $80 billion in IRS funding passed by Democrats last year; reforming welfare programs like SNAP and TANF; reforming the permitting process; and increasing domestic energy production.
Even after the introduction of the GOP proposal, President Biden continues to refuse to meet in person with Speaker Kevin McCarthy (R-CA). The House narrowly passed the bill on a 217-215 vote on Wednesday, April 26. The bill is expected to be dead on arrival in the Democrat-controlled Senate, and President Biden has already criticized the legislation.
Nonetheless, there is some evidence that Speaker McCarthy’s release of the bill is putting pressure on vulnerable Democrats. In the last week, several Democrats in the House and Senate have called on the President to reverse his position — that he would not negotiate a debt limit with spending restraints — and begin negotiating with Republicans over adding other items to a debt ceiling package. Senate Republicans have so far echoed the calls of their House counterparts in urging Biden to negotiate.
One complication to the debt ceiling fight is that it remains unclear when the deadline will be hit. The statutory borrowing cap was officially hit in January and the Treasury department has been using “extraordinary measures” to temporarily delay the deadline and continue making payments on debt and other outlays. While initial estimates forecast the debt ceiling would be hit in August or September, more recent estimates from financial institutions have warned the date could be June or July due to lower-than-expected tax receipts and a slowing economy.