By Hudson Crozier
Yesterday, Speaker of the House Kevin McCarthy (R-Calif.) announced legislation that would grant President Joe Biden’s request to raise America’s debt ceiling—with strings attached. This comes at a time when banks and economists are warning that the U.S. could reach its deadline for paying debt sooner than expected in the coming months, bringing the nation dangerously close to default.
McCarthy’s bill would make large cuts to federal spending by eliminating Biden’s student loan forgiveness plan and certain tax credits, repealing the increased budget for the Internal Revenue Service, prioritizing U.S. energy independence, and more. These spending changes would decrease how much debt the country takes on in the first place. In return, the bill would raise the debt ceiling by $1.5 trillion to avert the current crisis.
It’s a long shot: While the bill could pass the House, it has almost no chance of passing the Democrat-controlled Senate without Biden’s support. Biden has made it clear for months that he won’t make any concessions to raise the debt ceiling, which he reiterated in response to McCarthy’s proposal. Democrats have the upper hand in this scenario—it will be easy to paint the Republican efforts as obstructionist given the looming crisis.
Big picture: The U.S. defaulting on its $31.4 trillion in debt would cause an unprecedented economic crisis. Biden, McCarthy, and the Federal Reserve have promised to avoid that scenario at all costs. Both parties have contributed to the massive national debt over the years; Republicans even raised the debt ceiling three times under former President Donald Trump. But Biden is already spending more than Trump at this point in his presidency, and McCarthy is making a promised attempt to restrict government spending going forward.