The GOP’s Alarming Opposition to Raising the Debt Ceiling
Economic Policy Brief #52 | By: Caroline Howard | February 7, 2023
Header photo taken from: Bill Clark / CQ Roll Call
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Photo taken from: CNN
The United States is currently heading toward the path of a debt default, for the first time in the nation’s history. This could have catastrophic effects not only on the American economy but on the entire world economic order. The country already went past its debt ceiling in January, going over the 31.4 trillion dollar limit it set for itself in December 2021. On the 19th of January, when it was official that the debt limit had been passed, Treasury Secretary Janet Yellen announced that she was taking “extraordinary measures” in order to keep the United States current on all of its obligations. These measures mainly include stopping investments in different investment funds for government employees. She said that after a debt ceiling agreement is passed and signed, they will resume the investments as usual.
Speaker McCarthy had a meeting with President Biden to discuss the debt ceiling last Wednesday, and came out of the meeting hopeful, saying “I think that at the end of the day, we can find common ground.” The Washington Post reported on the fifth of February that members of the GOP caucus have pushed forward seven ideas that they want in a potential debt ceiling deal. One idea that is being floated, is massive cuts to domestic discretionary spending. The proposal would set discretionary spending at what the government spent during the 2022 fiscal year.
Most government programs, except for military spending or veterans benefits, would get a potential 20% cut. This would mean less funding for programs like Pell Grants, and energy assistance for impoverished Americans. Other ideas include cutting spending on Medicare and Social Security. However, this is not a very popular option, and McCarthy even assured reporters after the meeting that cutting spending to Social Security or Medicare is off the table.
Other ideas include undoing Biden’s funding of the IRS, which would cut about 80 billion dollars from federal spending over the next ten years while eliminating the estimated 204 billion dollar increase in government revenue over the same period of time. Or, as some Republicans are saying, we could just default on the debt entirely. Representative Andy Biggs tweeted on the 17th of January that ”We cannot raise the debt ceiling. Democrats have carelessly spent our taxpayer money and devalued our currency. They’ve made their bed, so they must lie in it.”.
All of these options definitely have major downsides for the most impoverished among us. Taking massive spending cuts to vitally needed programs that will result in too many unneeded deaths will only cause harm to this country. Republicans are tied to the military-industrial complex, and will never cut a dime to the part military spending, which is scheduled to reach over 800 billion dollars this fiscal year.
This massive amount of spending always increases with little to no debate as to why we need to continually funnel money into weapons contractors every year.
However, when a person is impoverished and just needs a little bit of help to get by for that month, every penny that’s spent is scrutinized. Going back on IRS funding will only help the rich benefactors that donate to the GOP, and drive the US into even more debt, because the IRS will lose the ability to track down money owed by high income tax-payers.
The U.S. defaulting on its debt would be one of the most disastrous outcomes of this whole situation. Our credit rating will be downgraded again, and investment in our economy will shrink.
Chart taken from: Reuters
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If the U.S. can’t get its act together and actually solve this crisis, the consequences for everyone involved will be severe, maybe even with the dollar losing its standing as the world standard for economic trade.
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Congressional Budget Office: https://www.cbo.gov | Since 1975, CBO has produced independent analyses of budgetary and economic issues to support the Congressional budget process. Each year, the agency’s economists and budget analysts produce dozens of reports and hundreds of cost estimates for proposed legislation.
Center on Budget and Policy Priorities: https://www.cbpp.org | We are a nonpartisan research and policy institute that advances federal and state policies to help build a nation where everyone — regardless of income, race, ethnicity, sexual orientation, gender identity, ZIP code, immigration status, or disability status — has the resources they need to thrive and share in the nation’s prosperity.
Economic Policy Institute: https://www.epi.org | The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank created in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI believes every working person deserves a good job with fair pay, affordable health care, and retirement security.