Kevin McCarthy’s Debt Ceiling Proposal This Morning: Dead on Arrival
Author: Greg Valliere
April 17, 2023
A MAJOR FEATURE OF McCARTHY’S plan is that old Washington standby: kick the can down the road. He would delay any action on the debt ceiling for a year, until the spring of 2024. The idea of a fierce spending battle just a few months before the election in the fall 2024 is a non-starter.
WE GIVE McCARTHY CREDIT FOR coming up with the outlines of a plan, but the components of his proposal are so unpopular that they may not even win support from House Republicans, let alone the Democrats who control the Senate. A major portion of his proposal is deep cuts in food assistance, another non-starter.
KEY ELEMENTS OF McCARTHY’S PLAN ARE DEAD ON ARRIVAL: There’s no support in the Senate for a cap of 1% or 1.5% on annual domestic spending hikes for the rest of the decade, or clawing back pandemic aid that some frugal states have not fully spent.
THIS IS THE BEGINNING OF A TWO-STEP BUDGET BRAWL: First, the White House will listen to budget cuttimg proposals (and reject them). The second part of any deal would have to be passage of a “clean” debt ceiling hike sometime this summer when the government theoretically will run out of money.
HUGE SPENDING CUTS — OR EVEN MODERATE CUTS — will be close to impossible, because if some major programs — discretionary funding for veterans’ programs, for example — are protected from cuts, reductions to all other nondefense accounts could exceed 20%.
McCARTHY IS NOT EXPECTED to call for cuts in Social Security or Medicare spending, although he may call for a bipartisan commission to address the long-.term solvency of those programs — another classic “kick the can” option.
BOTTOM LINE: McCarthy will generate lots of media attention this morning, but this is simply an opening gambit. Eventually. he will have to scale back his bold spending cuts, which will enrage hard-line conservatives in the House, who are prepared to oust him if he doesn’t win huge spending restraint.
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