What the Republicans want in exchange for raising the debt limit

WASHINGTON — Debt ceiling negotiations between the White House and congressional Republicans took a new, tougher tone this week after House Speaker Kevin McCarthy signaled he was unwilling to compromise on Democrats over a list of demands from the Republican Party.

Instead, McCarthy’s deputies say they view a vote to raise the debt ceiling, and to avoid a potentially catastrophic US debt default, as a concession to the Democrats, and potentially the only one they plan to make. Given the havoc a default could wreak on the global economy, raising the borrowing limit is often a formality, often structured as a supplemental bill to be added to unrelated legislation.

Rep. Patrick McHenry of North Carolina, the top Republican negotiator, was asked Tuesday night what concessions Democrats were getting as part of a possible compromise with the White House to win both Republican and Democratic votes.

“The debt ceiling,” he replied.

“That’s what they’re getting,” added Rep. Garrett Graves of Louisiana, another Republican negotiator.

Republicans hold a slim majority in the House, while Democrats hold a one-seat advantage in the Senate. Therefore, negotiators need to craft a bill that can pass both houses. Republican demands for policy changes that many Democrats would never vote for will complicate the path of any eventual deal in Congress.

A Democratic official said that Republicans have already rejected at least two compromise offers from the White House. The first proposed freezing government spending next year at its current level, and another proposal would set a two-year spending cap.

While their demands could change, below are the key concessions Republicans want from Democrats, in exchange for their vote to raise the debt ceiling. Some are relatively easy, while others are proving intractable.

• Reform of energy and mining permits: The proposal is arguably the easiest issue for negotiators to reach consensus on, given that both the White House and House Republicans support the broader goal of making it easier to launch new energy projects like wind farms and gas pipelines. in the U.S. Talks could turn dangerous over the question of what kind of permits to prioritize: Republicans want fossil fuels, while many Democrats believe renewables should top the list.

• Rescind Unused COVID-19 Funds: Between 2020 and 2022, Congress authorized approximately $4.6 trillion to help the United States respond to the coronavirus pandemic. The Congressional Budget Office estimates that about $30 billion of that money has not been earmarked and could be recouped to create savings. President Joe Biden has indicated that the White House will agree to this demand.

The following ones are much more complicated.

• New Medicaid Work Requirements: the republican debt limit The bill passed by the House in April would require able-bodied adults without children to work or train for work in order to remain on Medicaid, the federal health insurance for low-income people. The White House rejected this proposal. “I will not accept any job requirements that will impact my people’s medical health needs,” Biden said earlier this month.

• Changes to the current work requirements for food stamps: Unlike the Medicaid demands, it appears there might be some room for compromise in the GOP proposals to raise the retirement age from work for people enrolled in the Supplemental Nutrition Assistance Program (SNAP), from 50 to 55. On the same day that Biden rejected Medicaid work requirements, she also noted that she supported work requirements in the 1990s, and “there may be a few others” that she would support, “but nothing major.”

• A reference number for the federal budget in 2024 that is lower than in 2023: This is the biggest sticking point in the entire process, and the issue on which talks have been temporarily halted on several occasions.

McCarthy often equates the US national debt of $31.4 trillion with the debt of individual consumers. He argues that if you “go over your limit” on personal credit cards, then you, and by extension the United States, need to “spend less in the coming year than we did this year.”

But it’s not that simple. Raising the debt limit does not authorize more spending in the future. For now, it simply allows the government to cover the bills it has already incurred.

What the Republicans are really doing is using their influence, and the implicit threat of default, to achieve a longstanding and independent Republican political goal: force the government to cut discretionary spending. In this case, McCarthy wants baseline 2024 spending to be cut to its 2022 level. However, he also insists that defense spending, which makes up more than 30% of the total, be shielded from any cuts. This means that everything else would have to be reduced further for the total number to return to 2022 levels.

According to the conservative-leaning CATO Institute, exempting the military from a spending cut would require cutting the rest of government, from homeland security to public health and air traffic control, by around 20%.

Biden has responded to this demand for sharp cuts to domestic programs with a proposal to freeze this year’s spending levels next year, but McCarthy has so far rejected it.

“I don’t think I’m asking for the impossible,” McCarthy said Wednesday. “Let’s spend less money next year than we did this year.”

In addition to the public demands above, House Republicans also have a second set of requests, a sort of conservative wish list that McCarthy and his team have so far not seriously put on the table.

But these outdated demands were on full display Wednesday in a memo released by conservative Texas Rep. Chip Roy, a McCarthy antagonist who led the failed effort earlier this year to deny McCarthy the House speaker.

Roy’s demand list contains four additional items. Each one of them alone represents a red line for the White House.

1. Repealing electric vehicle tax credits at the center of Biden’s renewable energy agenda, which were passed last year in the Inflation Reduction Act (IRA).
2. Repeal $80 billion in additional funding for the Internal Revenue Service, also part of the IRA.
3. Overturn Biden’s executive action to forgive approximately $315 billion in student loan debt. (The Supreme Court will decide the fate of the plan in the coming weeks.)
4. Enact the REINS Act, which would require regulatory agencies like the Federal Trade Commission and the Environmental Protection Agency to get congressional approval before they can issue major rules.

Roy’s memo called on McCarthy and the Republicans to “hold the line” and insist that all their demands be met or not at all. He also suggested that, at least for Roy, avoiding debt default was not the number one priority.

“Each [of the demands] are critical and none should be abandoned solely for the sake of a ‘deal’,” Roy wrote.