What is in Republican McCarthy’s debt-limit spending cut package?
Factbox: What’s in Republican McCarthy’s debt-limit spending cut package? Reuters, Andy Sullivan.
Items Republicans and McCarthy are pushing for in a debt-limit package. The bill would essentially pair $4.5 trillion in spending cuts with a $1.5 trillion increase in the federal debt limit. Republicans are wanting to talk about government borrowing.
“What’s in your wallet,” today as one bank loves to ask when it comes to credit cards. Well, it is probably going to be far less if the McCarthy and the rest of the Republicans have their way in Congress. For general reference, here is what the Republicans are offering up. Keep in mind much of the issue with he debt stems from an earlier trump tax bill.
Debt – Ceiling Increase:
Generous Republicans are offering up a $1.5 trillion increase in spending if Democrats cut back on some of their programs since 2020. This is not anything new, most of us already knew this. Such a contraction would play hell with the economy which is doing rather well right now. New Deal democrat sees some clouds on the horizon. And Powell keeps trying to kill employment with Fed Rate increases. It appears banks are suffering more than Labor.
Meanwhile the general public is oblivious to what the Republic package means for them. They are too tied up in pointing the finger at others claiming they are getting freebies. The news for them is, much of the program benefits should be close to free if not free. Healthcare being one of them, food another, etc.
Republican’s plan reduces government spending to last year’s levels. This would be a decrease 0f ~9%. Yearly growth would be capped at 1% annually for the next 10 years. This action would save approximately $3.2 trillion. No details have been provided and the concern is with specific government operations, air traffic control, housing, military etc. Environmental programs cut to provide more money to Pentagon spending in their states. No inflationary measures in the bill either.
Claw Back Unspent Covid 19 Funds:
$Five-point-two trillion approved by Congress in 2020 and 2021 under Republican President Trump and Democrat Joe Biden. Both are targeted by the House Republicans as a way to rein in federal spending. The cuts would undercut healthcare for military veterans and pensions for blue-collar workers with little impact to improving the U.S. fiscal status. This is not the problem with the economy.
What remains is $80 billion.
Cancel Student Loan Debt Relief:
Republicans have portrayed as unfair to those who did not go to college or already paid off their debts. Students can get a better loan deal on the street from loan-sharks. These loans are predatory.
Republicans are targeting an $80 billion plan updating the Internal Revenue Service. The IRS hire more employees and deploy new technology. Blocking both of these initiatives would hurt government revenues.
Repeal Geen Tax Incentives
Block new and repeal old incentives for renewable energy, electric vehicles and other climate-friendly technology. The bill does not target corporate tax increases, drug-pricing restraints, etc.
Tighten Work Requirements
This part is a C&P. Republicans would stiffen work requirements for participants in some antipoverty programs.
Childless adults up to 56 who get health insurance through Medicaid, which covers low-income people, would have to work at least 80 hours a month or participate in job training or community service.
Likewise, childless adults up to 56 years old who receive SNAP Program food assistance would lose benefits after three months if they could not prove they were working at least 20 hours a week or participating in a job training program. Those work requirements currently apply to those up to 50 years old.
Increased Authority Over Regulations:
Congress would have greater power to review new rules put forward by the executive branch (What no separation of branches?).
More Incentives for Oil and Gas:
This House bill involving Fossil Fuel passed in the House and stalled in the Senate. Republicans hope to revive it. They would do us a favor if they spent more time on sponsoring and promoting new energy technology. Most of them are old and live for the moment.
This is most of the Republican wish list, I am confident there is probably more in the political shadows. We will have to wait and see what is there.
Try that with your credit card: max it out then demand the credit card company ‘negotiate’ a bunch of bullshit that has nothing to do with the debt incurred to collect …
I believe they would try to convince voters it is like trying to put something more on your credit card when it is already maxed out. Analogies don’t convince people.
“Try that with your credit card. . . ” That’s the Trump MO: sign the contract, get the work done, and then refuse to pay without substantial discounts.
well, that happend to some people i know who subcontracted subtantial work on a state project. the prime refused to pay for the work after it was done. the state did nothing to enforce the payment. it seems to be part of the zeitgeist.
the lawyer they consulted would have charged more than they were owed…or at least close enough to it that it was not worth taking the chance of losing.
which has happened to some other people i know. judges are not always very good about understanding the facts presentd, and some lawyers are not equal to others.
i think my moral here is that honesty has to be part of the culture before you can expect the politicians or courts to be honest. so my moral seems to be we have no morals.
We Hit the Debt Limit. What Happens Now?
NY Times – May 8
(Just the end to a very complicated, graphics-laden story.)
… Many on Wall Street think that the worst-case scenario would play out if the government missed an interest payment, leaving it in default on its debt.
Economists have warned that such an outcome could be catastrophic. Domestic and international investors have historically seen American debt as a safe investment, and a default could impair their confidence in the United States to make good on its bills and might push up the government’s borrowing costs for years to come. And worries could ricochet through other markets.
The Fed has in the past discussed strategies to temporarily cushion potential damage, like buying defaulted bonds. But the central bank’s chair, Jerome H. Powell, emphasized last week that nothing it could do would save America from serious consequences.
It is hard to know exactly how investors would react to missed interest payments, because there is little precedent: The Treasury failed to make on-time payments to some small investors in the spring of 1979 because of a technical problem, but otherwise the government has paid back its debts on time in modern America. Markets could gyrate immediately, or it could take time for them to react.
At the end of the day, all paths lead to the same place: The United States will need to find a way to pay the bills it has incurred. The question is how much damage happens along the way.
What Would the GOP Plan Actually Do to the Budget?
NY Times – May 8
House Republicans want to cut federal spending — and they just passed a bill that would do that.
But they don’t want to cut defense spending.
They don’t want to cut veterans’ health care spending.
They don’t want to cut Medicare or Social Security.
Their bill, which would raise the country’s borrowing limit for a year in exchange for a decade of spending reductions, does not include many specifics. It achieves most of its savings with spending caps for discretionary spending — the part of the budget allocated annually by Congress that is not automatic like Social Security payments — but it doesn’t say what discretionary programs should be cut and which ones should be spared.
If the entire discretionary budget were subject to cuts, the reductions would be “aggressive” but “achievable,” said Marc Goldwein, a senior policy director for the Committee for a Responsible Federal Budget, which backs deficit reduction.
But if favored programs are protected, the cuts everywhere else will get much deeper and harder to implement. “It goes from being an achievable goal to one that would be very difficult to achieve,” he said. …
Just so you know, cutting Social Security would do nothing to reduce the deficit. Social ecurity is paid for entirely by the workers who are paying for their own benefits.
Social Security has lent money TO the government in order to build up a Trust Fund to help pay for the Boomer generation (that is to enable the Boomers to pay in advance for their own retirement due to their greater numbers that would make the usual pay as you go system unfair to the succeeding smaller generation.
The shouting about “the deficit” by CRFB and others is their unwillingness to PAY BACK the money they have borrowed FROM Social Security. But we have already seen what the Republicans (mostly) feel about actually paying their bills.
This just in…
(Reuters) – President Joe Biden and top Republicans and Democrats from Congress are set to sit down this week to try to resolve a three-month standoff over the $31.4 trillion U.S. debt ceiling and avoid a crippling default before the end of May. …
Biden is due to meet on Tuesday at the White House with McCarthy for the first time since Feb. 1, with Senate Majority Leader Chuck Schumer and top Senate Republican Mitch McConnell. Top House Democrat Hakeem Jeffries will also join the talks.
Analysts do not expect an immediate deal to avert a historic default, which the Treasury Department has warned could come as soon as June 1. Forecasters warn a default would likely send the U.S. economy into deep recession with soaring unemployment.
But the start of active talks could soothe the nerves of investors who last week forced the federal government to pay its highest interest ever for a one-month debt issue. …
Biden should tell McCarthy et al. to pound sand. Biden has multiple choices to avoid default (billion dollar platinum coin, consul bonds, 14th amendment). Once Congress passes a clean bill to raise the debt ceiling, discussion can begin on the budget for the next fiscal year. Meanwhile, America pays its bills. Biden should not negotiate with GOP terrorists.
I agree. Does Putin count as a terrorist on your list?
I especially agree about the 14th amendment. Glad to see that Laurence Tribe has come around to agreeing with me.
Biden would have to act unilaterally. No hope in waiting for the Congess or the Courts.
Trump got away with “executive action” that some people thought was unconstitutional. No hope the R’s would see that as precedent, but we are at a point where we need someone with courage to act, and we can only hope he acts sanely and wisely and not just out of overweening pride and agression like the one who went before.
Obscure law contains debt limit escape hatch for Social Security
Roll Call – March 2
It’s a time-worn argument for raising the debt limit: Without increased borrowing authority, Social Security checks would stop flowing.
“Addressing the debt limit is about meeting obligations the government has already made, ensuring vital payments to Social Security recipients are uninterrupted and continuing to support our veterans,” Senate Majority Leader Charles E. Schumer, D-N.Y., and House Minority Leader Hakeem Jeffries, D-N.Y., said in a Feb. 13 joint statement.
Veterans benefits would in fact be at risk. But Social Security checks could still be issued — with some difficulty.
A 1996 law provides an escape clause from the debt limit that allows the Treasury Department to pay Social Security benefits, along with Medicare payments, even if there is a delay in raising the debt ceiling. It allows for the Social Security and Medicare trust funds to be drawn down to keep those benefits flowing until the debt limit is raised, while prohibiting those funds from being used to pay for any other government programs.
“There is a legal authority and it arguably should be used to make sure benefits are paid,” said Steve Robinson, chief economist for the bipartisan Concord Coalition, which advocates for fiscal discipline. Robinson, who wrote a paper this week to highlight the issue, said the debt limit must still be raised to enable the Treasury to pay all its bills. …
… in 1996, Congress provided the Treasury with temporary authority to issue public debt that would not count against the debt limit, and the amount of debt authorized was equal to the Social Security benefits that were expected to be paid the following month. That authority allowed the Treasury to issue about $29 billion in securities to the public, according to another GAO report.
As a result of that action, Congress that year also passed the law to expressly prohibit any Social Security or Medicare trust fund money drawn down pending a debt limit increase from being used to pay for other programs.
But using that law today to keep those benefits flowing without a debt limit increase wouldn’t be easy, Robinson said.
Since 1997, under an administrative policy change, the Social Security Administration no longer pays out all benefits at the beginning of each month. Instead, they are paid out based on each beneficiary’s date of birth, Robinson wrote.
As a result, Robinson said, even if the Treasury draws down Social Security trust funds to free up cash to make those benefit payments, the staggered benefit payment schedule throughout each month and an inability to prioritize payments mean some of the benefits might not end up getting paid. …