President Biden has repeatedly challenged Republicans to show him a fiscal plan on the debt ceiling. Now, they have one.
House Republicans’ bill would raise the debt ceiling for one year or until the debt hits $32.9 trillion, whichever happens first. In exchange for that, the GOP wants a series of policy changes that are desirable.
Spending would be capped at fiscal year 2022 levels. In Washington-speak, this will be decried as a draconian cut, because holding spending steady means it won’t go up as planned. Keeping spending the same as it was last year is hardly a radical move, and pales in comparison to the initial idea to balance the budget in ten years.
The bill repeals some of Democrats’ worst policies, such as most of the $80 billion windfall for the IRS and the illegal and unconstitutional student-loan “forgiveness” plan. It repeals some of Democrats’ green-energy subsidies, and it reforms the permitting process to make it easier to build new energy infrastructure.
It puts new work requirements on able-bodied adults who have no dependents and receive Medicaid or SNAP benefits. It also claws back unspent funds from pandemic programs. Democrats should be fine with that because, by Biden’s own admission and now affirmed by congressional resolution, the pandemic is over.
All told, these are welcome changes. President Biden has already decried them as the extreme rantings of “MAGA Republicans,” but this bill is run-of-the-mill fiscal conservatism, not unlike something that would have come out of any Republican-controlled House at any point in the past few decades.
One shortcoming is in the nature of the cuts. The majority of the spending cuts are unspecified, which means Congress is pinky-promising to abide by the fiscal year 2022 spending cap in future legislation. In the past, Congress has blown through those limits in similar deficit-reduction bills when the temptation to spend is too high (which it pretty much always is). The most egregious example was the cuts extracted from the last major debt-ceiling battle in 2011.
A handful of Midwestern Republicans nearly killed any chance of the bill’s passing when they saw ethanol subsidies were on the chopping block. Ethanol subsidies should be on the chopping block, but in an effort to get to yes, House leadership scaled back the cuts. Though horse-trading of this kind is not bad per se, it hurts the credibility of fiscal conservatives at a time when their message is sorely needed.
Ideally, Congress would also address the long-term drivers of the national debt, Medicare and Social Security. But reforming these programs would require a long and arduous process involving serious policy work. There is a good argument that a polarizing debt-ceiling standoff, with a short deadline for action, isn’t a viable forum for such reforms.
Biden has said he will not negotiate with Republicans on the debt limit and will only sign a bill that raises the limit with no conditions. That’s preposterous and ahistorical. One purpose of the debt-limit mechanism, which is unique to the U.S., is to force Congress and the president to reconsider spending at fixed intervals. All eight of the largest deficit-reduction laws passed since 1985 have been attached to debt-limit increases, and both Democrats and Republicans have used the debt ceiling as an opportunity to cut spending. It’s Biden who would be irresponsible were he to blow off Republicans’ proposals.
Biden can no longer argue in good faith that Republicans don’t have a plan for the debt limit. They do. Now it’s on Biden and Democrats in Congress to negotiate with the party that controls the House of Representatives. In divided government, no one gets everything he wants, but both sides should agree on this: Default is not an option. The debt-limit deadline is approaching quickly. Don’t expect a deal until the eleventh hour, but there must be a deal.