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What the House GOP could demand in debt limit standoff

U.S. Representative Chip Roy, R-TX., is seen on his way to the House chamber during the second week of the 118th Congress at the US Capitol in Washington, D.C., on Tuesday, January 10, 2023. (Photo by Craig Hudson/Sipa USA)(Sipa via G3 Box News Images) Craig Hudson/Sipa USA via G3 Box News

What the House GOP could demand in debt limit standoff

Samantha-Jo Roth

January 20, 06:00 AM January 20, 06:01 AM

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The U.S. government hit its $31.4 trillion borrowing limit on Thursday, just as newly empowered House Republicans, led by Speaker Kevin McCarthy (R-CA), say they’ll use the debt ceiling to force budget cuts.

Negotiations are not expected to get into full swing until lawmakers return to the nation’s capital next week. However, the battle lines are already beginning to emerge. Hard-line conservatives have enormous influence in the House because of the party’s slim majority. McCarthy offered holdouts in the conference whose votes he needed to become House speaker guarantees that the debt ceiling would not be raised without significant cuts to government spending. But there are no signs yet that Democrats or the Biden administration are willing to negotiate, insisting instead that the debt cap be lifted “without conditions.”

McCarthy and other House Republicans are emphasizing a debt limit increase with no strings attached is “totally off the table.”

“Let’s change our behavior now. Let’s sit down. He’s the president. We’re the majority in the House. The Democrats are the majority in the Senate. And that’s exactly the way the founders designed Congress to work — find the compromise and find the commonsense compromise that puts us back onto a balanced budget,” McCarthy said during a press conference on Capitol Hill on Tuesday.

House Budget Chairman Jodey Arrington (R-TX) reiterated prior warnings from House Republicans on Thursday evening.

“Giving in to Democrats’ demand for a debt ceiling increase without implementing fiscal guardrails is neither reasonable nor responsible. Democrats and Republicans must seize this opportunity to rein-in our unsustainable spending and reorient our nation’s financial trajectory before it’s too late,” Arrington said in a statement.

DEBT CEILING STANDOFF: MCCARTHY REJECTS DEMOCRATS IN MAJOR BREAK WITH TRADITION

Republicans are calling to balance the federal budget in 10 years by capping discretionary spending at 2022 levels. According to aides with knowledge of the discussions, Republicans intend to identify federal programs that can be scaled back or eliminated in government spending bills later this year.

To show Democrats they are serious about their demands, House Republicans are preparing a “debt prioritization plan” that would tell the Treasury Department what to do if lawmakers and the White House can’t agree to lift the nation’s debt limit later this year. The proposal would call on the Biden administration to make only the most critical federal payments. According to those familiar with the proposal, it would require the Treasury to keep making interest payments on the debt. One aide noted interest payments can amount to $500 billion a year, which can be met without additional borrowing.

While it is still unclear what spending will be prioritized in the emerging contingency plan, it could specify that the Treasury Department continue to make payments on Medicare, Social Security, the military, and veterans benefits. Rep. Chip Roy (R-TX) is the top conservative helping broker this deal. Staff for the congressman said they are aiming to pass a payment prioritization plan by the end of the first quarter of the year.

“We just want to put commonsense reforms in place. Limit spending at FY22 levels at the top line,” Roy said during an appearance on Fox Business on Wednesday. “You can have the defense spending you need to defend us against China, limit the nondefense discretionary, drop that down to pre-COVID levels, boom — you cut the money from the bureaucrats.”

LAWMAKERS HEADED FOR A BIG PARTISAN STANDOFF OVER THE DEBT LIMIT IN 2023

On Thursday, Brian Deese, director of the White House National Economic Council, said there are risks associated with the uncertainty caused by the debt ceiling standoff.

“This is not that complicated. This is not about new initiatives or new opportunities. This is about meeting the obligations that this country has already made,” Deese said in a CNN interview.

Several aides for Senate Republicans say it’s perfectly reasonable for conservatives to ask to have a discussion with Democrats about raising the debt ceiling and try to understand how and why the country has hit its $31.4 trillion limit. They expect to have more conversations within the conference beginning next week when lawmakers return to Capitol Hill for the first time since the United States hit the borrowing limit.

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“There’s a lot of uncertainty about how this is going to end,” said one staffer of a prominent Senate Republican who would like to remain anonymous in order to reflect candidly on the situation.

The staffer reflected on how the dynamic might play out in the Senate.

“We could offer a number of amendments in order to force Democrats to take a series of difficult votes that could benefit us in the upcoming election,” they said. “Then after that, we could vote to raise the debt limit. But it’s clear we are dealing with a very unpredictable majority in the House who may not agree to that. We have to watch and wait to see what they do.”

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