House Conservatives Outline Spending Cuts to Raise Debt Limit

House Conservatives Outline Spending Cuts to Raise Debt Limit
© Bloomberg. NATIONAL HARBOR, MARYLAND – MARCH 02: U.S. Rep. Scott Perry (R-PA) speaks during the Conservative Political Action Conference (CPAC) at Gaylord National Resort & Convention Center on March 2, 2023 in National Harbor, Maryland. The annual conservative conference kicks off today with former President Donald Trump addressing the event on Saturday. (Photo by Alex Wong/Getty Images) Photographer: Alex Wong/Getty Images North America

(Bloomberg) — Republican conservatives in the House Freedom Caucus are demanding at least $3 trillion in spending cuts over a decade in exchange for supporting an increase in the debt ceiling, an opening bid in negotiations that is sure to be rejected by President Joe Biden and Democrats.

The group of several dozen GOP lawmakers has more than enough votes to exert significant leverage on Speaker Kevin McCarthy in the narrowly divided House, which must vote to raise the debt ceiling sometime in the coming months to avoid a market-rattling US payment default.

Biden, who released his  $6.9 trillion budget blueprint on Thursday, has insisted the debt ceiling must be raised with no strings attached even as he’s said he’s willing to talk about spending. The Freedom Caucus wants an explicit link.

“America will not default on our debts unless President Biden chooses to do so,” Freedom Caucus Chair Scott Perry, a Pennsylvania Republican, said at a news conference Friday.

The group said it will consider voting for a debt ceiling increase if Congress first passes a year-long stopgap bill cutting domestic spending to fiscal 2022 levels — a $130 billion cut if defense is spared — unless congressional appropriations committees can agree on more tailored cuts by the Sept. 30 government funding deadline. Discretionary spending would rise just 1% a year for nine more years, under the Freedom Caucus plan.

Members acknowledged that the group’s plan falls short of balancing the budget—which would take more than $16 trillion in cuts. Instead he said the group ready to start the process of getting to balance eventually now by negotiating with Democrats.

“It is step one of getting our house in order,” said Texas Representative Chip Roy said.

The group also is demanding an end to Biden’s student loan forgiveness program, rescinding unspent Covid funds, and rescinding both the $80 billion expansion of the Internal Revenue Service enacted last year and climate change spending from the Inflation Reduction Act.

“Now, we won’t get everything, but if you don’t put it out there you can’t even start,” South Carolina Representative Ralph Norman, a member of the Freedom Caucus, said. “A clean debt ceiling, we will never vote for that.”

Without the votes of Freedom Caucus members, McCarthy can’t pass a partisan budget blueprint or agree to any deal with Biden. They showed their strength in January when some members denied McCarthy the speaker’s gavel until he agreed to a rules change what would allow just one lawmaker to call a vote to unseat the speaker at any time.

“The House Freedom Caucus is here to set a marker,” Colorado Republican Representative Lauren Boebert said.

Biden released a budget blueprint that claims $3 trillion in deficit reduction over 10 years, compared with doing nothing, on the back of $5.5 trillion in tax increases. The budget would still increase the deficit to $1.8 trillion in 2024 and add $19 trillion in debt.

McCarthy and Biden last met to discuss the budget at the beginning of February.  Biden said Thursday he would meet McCarthy at any time once McCarthy has made his budget plan public.

The official House GOP budget will be delayed past the mid-April deadline, McCarthy told reporters, because Biden’s own plan was a month late.

Source: Bloomberg