U.S. House GOP plan calls for federal spending cuts, conditions on debt limit increase

By: - January 10, 2023 3:51 pm

U.S. Capitol. Credit: Getty Images

WASHINGTON — U.S. House Republican leaders following a closed-door meeting Tuesday shared more details of the secret agreements Speaker Kevin McCarthy made with conservative lawmakers last week to secure the votes he needed to hold the gavel.

The so-called handshake deal, displayed on slides during the GOP weekly conference meeting, if adhered to could have significant ramifications for federal departments and agencies as well as the global economy. Democrats on Tuesday in reaction slammed the agreement as potentially leading to a partial government shutdown, an economic crisis, or both.

According to a slide on government spending and the debt limit shown during the GOP meeting, disclosed by CNN, the McCarthy deal places limits on when and how the GOP House will take up the annual government funding bills, needed to avoid a partial government shutdown.

The agreement also attaches strings to legislation that would raise or suspend the debt limit, required to avoid a first-ever default on the country’s debt later this year.

The agreement will make it much more difficult for House Republicans to broker a deal with the Democratic Senate and Biden administration on both spending and the debt limit.

The slide said House Republicans would:

  • Adopt a fiscal 2024 budget resolution balancing the budget within 10 years. Fiscal 2024 begins on Oct. 1.
  • Pursue “reforms to” the budget process and mandatory spending programs. Such programs include Social Security, Medicare, and Medicaid.
  •  Cap fiscal 2024 discretionary spending at enacted fiscal 2022 levels or lower.
  • Only pass spending bills that comply with the budget resolution and pass all 12 regular spending bills on time. Congress has not been able to do that since 1996.
  • Pass any stopgap spending bill, or continuing resolution, before the end of the fiscal year on Sept. 30.
  • Reject any negotiations with the Senate unless that chamber’s 12 spending bills are passed, the bills comply with the House budget resolution, and they reduce non-defense discretionary spending.
  • Not agree to a debt limit increase without a budget agreement or “commensurate fiscal reforms.”

Republican plans to pass a CR, or continuing resolution, before Sept. 30 indicate the party doesn’t expect to wrap up the fiscal 2024 government funding process by the start of the next fiscal year on Oct. 1.

‘An honest conversation’

House Majority Leader Steve Scalise said during a press conference Tuesday that McCarthy did disclose parameters of the handshake deal during the closed-door GOP meeting.

The Louisiana Republican argued that Republicans should force spending cuts in order to raise the debt limit, which pays for spending already approved by Congress.

“If we’re about to max out the credit card, then, before we hit that limit, shouldn’t we have an honest conversation about how to start living within our means, how to make sure we’re not spending money that we don’t have?” Scalise said.

“And when that comes up — at the same time you’re dealing with the debt limit — you ought to also put mechanisms in place so that you don’t keep maxing it out.”

Scalise said that Republicans “haven’t talked about reducing defense spending,” which means the roughly $130 billion in discretionary spending reductions that would have to take place for the fiscal 2024 government funding bills to comply with the fiscal 2022 spending levels would all come out of non-defense discretionary programs.

That side of the federal balance sheet includes hundreds of programs, such as the Agriculture Department, Army Corps of Engineers, Homeland Security, the Energy Department, national parks and forests, Transportation Department, and veterans’ health care programs.

Scalise didn’t go into detail about whether Republicans will push for changes to mandatory spending to offset raising the debt limit. That side of the federal budget includes Medicare, Medicaid, and Social Security. It also grows much faster than the discretionary side, which includes the dozen annual government funding bills.

Shutdown warnings

Connecticut Democratic Rep. Rosa DeLauro, the ranking Democrat on the House Appropriations Committee, said during a separate press conference that Republican demands about significantly reducing domestic spending are a nonstarter that could lead to a partial government shutdown later this year.

“Appropriations bills are must-pass bills. They require bipartisan, bicameral agreement,” DeLauro said. “It appears — quite honestly — that Republicans, they don’t understand this process, because in his attempt to become speaker, Kevin McCarthy reportedly already promised to cap spending at the 2022 levels in exchange for votes.”

The cuts to domestic funding, DeLauro said, would “slash what are crucial investments” in programs that address veterans’ mental health and homeless assistance programs, high-poverty schools, early learning programs, access to child care, job training programs, and small businesses.

Pennsylvania Rep. Brendan Boyle, the top Democrat on the Budget Committee, warned the GOP against using the debt limit as a political negotiating card.

“The debt ceiling should not ever be something we play around with. It is too dangerous. This country has been able to get through and weather government shutdowns. We would not be able to weather a compromise on the full faith and credit of the United States,” said Boyle. “It would cripple not only the U.S. economy but the world economy.”

The Bipartisan Policy Center, a think tank regularly relied on for debt limit predictions, said in June that the default date, or X-date, for the debt limit would “likely arrive no earlier than the third quarter of 2023.”

But Shai Akabas, BPC’s director of economic policy, noted in a written statement this week that a lot has changed since he released the last forecast, including President Joe Biden’s student debt loan forgiveness plan and ongoing court cases, persistent inflation, and the speed of interest rate increases.

“Each of these could have a significant impact on the X Date,” Akabas said. “The problem right now is that we don’t have a new baseline to work off, and [the Congressional Budget Office] won’t issue one until later in January, so we won’t really be able to make a comprehensive new projection until we have that information.”

Akabas said the new default deadline could now be “sometime around the middle of the year.”

U.S. Senate Appropriations Chair Patty Murray, a Washington Democrat, and ranking Republican Susan Collins of Maine, released a joint statement Tuesday, saying that as the new leaders of the panel the two “look forward to working in a bipartisan way here in the Senate to find common ground and move our country forward.”

“There are so many pressing challenges our nation faces right now — both here at home and abroad — and it is our responsibility as members of Congress to do the hard work to listen to one another, find common ground, and then reach sensible solutions that help the American people,” they wrote.

“This starts with funding the government in a responsible and bipartisan manner — that means marking up our appropriations bills and bringing them to the floor in a timely way.”

Budget process

House Republican efforts to overhaul the annual budget process, as outlined in the slides, could be especially challenging if the party attempts to rework the process for all of Congress and not just the House GOP.

The Joint Select Committee on Budget and Appropriations Process Reform, a 16-member bipartisan panel that included members of the House and Senate, spent much of 2018 attempting to rework the process.

Their recommendations included moving from an annual budget resolution to a two-year budget resolution, changing who sits on the Senate Budget Committee, and some technical changes. But the panel never reported its recommendations to the House or Senate.

Arkansas GOP Rep Steve Womack and Kentucky Democratic Rep. John Yarmuth, now retired, later released their own bill to overhaul the process, though it never advanced.

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Jennifer Shutt
Jennifer Shutt

Jennifer covers the nation’s capital as a senior reporter for States Newsroom. Her coverage areas include congressional policy, politics and legal challenges with a focus on health care, unemployment, housing and aid to families.

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