U.S. House Speaker Kevin McCarthy, a California Republican, holds a press conference inside the U.S. Capitol’s Statuary Hall on the debt limit and government spending negotiations on Wednesday, May 24, 2023. (Jennifer Shutt/States Newsroom)
WASHINGTON — Republicans and Democrats in Congress together brokered dozens of debt limit agreements, including several during the past decade, marked by a desire in both political parties to increase federal spending.
But U.S. House Republicans now are pushing for the federal government to spend less next year than it will this year in order for the party to move a debt limit bill.
It’s a flip in approach that’s left negotiators struggling to reach the bipartisan agreement needed to avoid a default on the U.S. debt as soon as June 1 that economists say would be catastrophic.
“Without the cultural shift on spending, you can’t unlock the rest of this thing,” North Carolina Republican Rep. Patrick McHenry, a top negotiator, said Tuesday of the stalemate.
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Louisiana Rep. Garret Graves, the other House Republican negotiator, said House Speaker Kevin McCarthy — who has voted repeatedly to raise the debt limit and increase federal spending — wants the final agreement “to fundamentally change the direction in regard to spending, in regard to debts.”
“The speaker has made clear to us, this isn’t that we just want to have a sugar high for one year in regard to reducing spending,” Graves said. “He wants us to truly put the country on a different trajectory.”
White House press secretary Karine Jean-Pierre on Wednesday criticized the two negotiators for saying that preventing a default is “the only concession they are willing to make.”
“Preventing a catastrophic default is not a concession, it’s their job,” Jean-Pierre said, noting that the GOP approach to the debt limit is a “manufactured crisis.”
McCarthy, speaking to reporters from Statuary Hall in the U.S. Capitol building on Wednesday, decried overspending by Democrats as a significant driver of the country’s debt.
That $31 trillion debt, however, has accumulated over decades because the laws that Congress passed — backed by both Democrats and Republicans — to create the modern tax code and fund the government allow for an annual deficit. The Treasury Department then borrows money to pay for that difference.
As that deficit built year-over-year, presidency to presidency, it became the nation’s debt — like the balance on a credit card that has become due.
The last time Congress reached a bipartisan agreement to curb growth in federal spending was in 2011 during another stalemate over the debt limit that led the country to the edge of default and caused a downgrade of its credit rating.
That agreement, called the Budget Control Act, allowed the Obama White House to raise the debt limit by $2.1 trillion in a series of increases that brought the borrowing ceiling to $16.4 trillion.
The law also set caps on discretionary spending for a decade in a noteworthy attempt to control spending.
Those limits only lasted for a couple of years before Republican leadership, concerned about a hit on defense spending, and Democratic leaders, worried about the impact on domestic spending, began brokering bipartisan deals to lift those caps by billions of dollars.
Those agreements were often tied to raising or suspending the debt limit.
Committee for a Responsible Federal Budget President Maya MacGuineas said during a phone interview the last 10 years have been an “interesting” time for the debt limit, because after tense standoffs in 2011 and 2013, “the debt ceiling just became a sleeper issue” until the Trump years.
Under former President Donald Trump, a Republican, the debt limit was raised three times.
“Each of which actually included policies that borrowed more rather than less and made the debt worse,” MacGuineas said. “Those were some Alice in Wonderland debt increases.”
Debt limit negotiations, MacGuineas said, have now returned to the not unusual approach “of including policies that would save money,” though she cautioned new thinking among some lawmakers has changed the tone of debt limit talks. Some Republicans have dismissed the dangers of default.
“The stakes seem much higher because there’s a small group of people who are really willing to talk about default,” MacGuineas said.
Two years later
Following the 2011 spending caps and debt limit agreement, Congress once again needed to address the debt limit in February 2013.
That suspension, tucked into another bill, only lasted for a few weeks until May 18. McCarthy voted for the combined bill.
Later in 2013, following a 16-day partial government shutdown, Congress passed legislation in October that funded the government through mid-January and suspended the debt limit through Feb. 7. The bill passed both chambers with broad bipartisan support.
Again, McCarthy voted for the bill.
In 2015 congressional leaders and the Obama administration brokered a deal that raised the debt limit through March 15, 2017, and increased the spending caps for fiscal years 2016 and 2017.
The law lifted the discretionary spending during fiscal 2016 by $50 billion total, with that split evenly between defense and domestic discretionary programs, and during fiscal 2017 by $30 billion with the same 50-50 split between the two categories.
Both the U.S. House and U.S. Senate approved the bill with bipartisan support, including McCarthy’s vote.
More debt limit deals, spending increases
In 2017, Congress passed a package that suspended the debt limit for a little over two months in a bill that included aid for Hurricane Harvey recovery and a short-term government funding bill. The legislation passed both chambers with broad bipartisan support.
McCarthy voted for the bill.
In 2018, congressional leaders and the Trump administration reached a bipartisan agreement in February that suspended the debt limit for more than a year, through March 1, 2019, while raising the spending caps for fiscal years 2018 and 2019.
That law raised discretionary spending — which Congress debates annually — during fiscal 2018 by $63 billion on domestic accounts and $80 billion on defense accounts.
For fiscal 2019, the spending cap was increased by $65 billion on domestic and $85 billion on defense.
The legislation, which included several other items, passed both chambers with bipartisan support.
McCarthy voted for the bill.
In 2019, congressional leaders and the Trump administration struck a deal to suspend the debt limit for two years and raise the spending caps by $321 billion across fiscal years 2020 and 2021 compared to what would have been spent under the 2011 law.
The measure, which passed with bipartisan support including from McCarthy, suspended the debt limit from August 2019 through July 2021.
McCarthy said in a written statement at the time that he was “pleased” the agreement “provides $20 billion more for defense than non-defense over two years.”
“While this deal is not perfect, compromise is necessary in divided government,” McCarthy wrote, though he said it was lawmakers’ “responsibility to come together and put America’s fiscal future on more sound footing.”
Republicans refuse to deal with debt limit
Democrats have mostly had to go it alone on the debt limit during the Biden administration, moving a $480 billion raise in October 2021 and a $2.5 trillion increase in December 2021.
McCarthy voted against both.
Republicans argued that because Democrats passed a $1.9 trillion COVID-19 package as well as their signature climate change, health care and tax bill, known as the Inflation Reduction Act, without Republican buy-in, Democrats should raise the debt limit on their own.
Under a divided government with Republicans in charge of the U.S. House by a four-seat majority, Democrats can no longer raise the debt limit with their own votes. Negotiations between McCarthy and the White House as of Wednesday night had not produced an agreement.
Without bipartisan legislation to address the debt ceiling, the federal government would no longer be able to pay all of its bills in full and on time.
Under a first-ever default, payments on hundreds of federal programs would be delayed, and the global economy would likely enter a recession, according to economists.
McCarthy said during his press conference Wednesday that negotiations over government spending and lifting the debt limit have become more challenging than he originally expected.
“There’s a number of places that we are still far apart,” McCarthy said. “I mean, it didn’t seem like it’d be this hard.”
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