Floor Vote is Likely next Week
On Wednesday, April 19th, House Speaker Kevin McCarthy unveiled the House’s GOP’s opening salvo in the negotiations to raise the debt limit in exchange for a wide array of funding and policy changes sought by Republicans upon taking control of the House of Representatives in January 2023.
Speaker McCarthy plans a floor vote in the House of Representatives next week, and despite his very narrow five seat majority, he is confident the House will pass the plan. No House Democrats are expected to support the House GOP plan. Passage of the plan would give McCarthy leverage with both the White House and the Senate to secure concessions as a condition for advancing this “must pass” measure to raise the nation’s debt limit and avoid potential default. To date, both President Biden and Senate Democrats have demanded a “clean” debt limit increase – with no other provisions attached – insisting that once the threat of default has been taken off the table only then can negotiations on the annual federal budget and other policy matters including tax and entitlement policies begin. House Republicans recognize their bargaining power is at their height during “must pass” negotiations on the debt limit, another reason that their proposal also calls for the debt limit to be revisited again mid-year next year. Biden’s goal of a clean debt limit increase will be more difficult to achieve if McCarthy is able to pass his package in the House, as it would illustrate the resolve of the House GOP to a high-stakes showdown in the coming months.
Earlier this year, Treasury Secretary Janet Yellen notified Congress the US Treasury had reached the current statutory debt limit of $31.381 trillion and had initiated the use of “extraordinary measures” to avoid default. Those extraordinary measures are estimated now to be exhausted as early as June or at latest by the end of August, by which time Congress and the Administration must have reached agreement or risk the first-ever default on the U.S. debt.
Details of McCarthy’s plan, The Limit, Save, Grow Act of 2023 (link) would raise the debt limit by $1.5 trillion or through March 31, 2024, whichever occurs first. The increase in the debt limit is tied to $4.5 trillion in budgetary savings and a House Republican policy wish list as follows:
- Limiting discretionary federal spending to FY22 spending levels – and then limiting increases in the budget to 1% annually over the next decade;
- Rescinding billions in unspent COVID aid;
- Repealing key provisions of the Inflation Reduction Act, including EV and climate change provisions;
- Inclusion of the House Republican Energy plan to advance fossil fuels;
- Imposing work requirements on Medicaid and food stamp recipients;
- Defunding 87,000 new IRS agents and
- Blocking the Biden Administration’s student loan forgiveness plan.
A complete section by section summary can be found here.
While McCarthy’s package will see no light of day in the Senate, it sets the stage for real negotiations to begin. Already, additional proposals are being floated by various blocs of Members in Congress, such as by the Problem Solvers Caucus, which is comprised of both Democrats and Republicans in the House.
You should anticipate that both Congressional and Administration efforts to gain the upper hand in negotiations over the debt limit will intensify over the next weeks and have the strong potential for immediate impact on this year’s Congressional agenda, the FY24 appropriations process and beyond.
