House Republicans are mulling an attempt to buy time for further negotiations on federal spending and deficits by passing one or more short-term suspensions of the statutory debt ceiling this summer, including potentially lining up the deadline with the end of the fiscal year Sept. 30.
No decisions on a cutoff date have been made, and it’s not yet clear when the Treasury Department will run out of cash to meet all U.S. financial obligations. But most analysts agree Congress will need to act at some point between early June and September, and lawmakers likely won’t want to leave the matter unaddressed before the August recess.
Any such short-term measure would likely be “clean” of any strings attached or specific spending cuts, and be designed as a suspension of the borrowing cap, which had been done repeatedly over the past decade until 2021, rather than a dollar increase in the debt limit. That would presumably make it easier for Republicans to swallow voting for it after pledging to only back a debt limit increase if paired with spending cuts.
Sources familiar with the talks described them as preliminary and subject to change after discussing with the House GOP rank and file. But there has been support within the conference for the basic idea of tying the two deadlines together — the debt limit “x date” and the end of the fiscal year —to create more pressure for a deal.
Ultimately, the only way House Republicans say they’ll vote for a longer-term debt limit fix is by tying it to spending cuts, and the current focus is on discretionary funds within the Appropriations committees’ purview, although other pots of money could be looked at.
House Republicans, for the moment at least, appear set on avoiding any proposals that could be construed as Social Security or Medicare benefit cuts. Although defense is a hot-button issue for Republicans, cutting discretionary spending is still viewed as an easier lift.
‘Show us your plan’
Speaker Kevin McCarthy, R-Calif., has pledged to conservatives to slice fiscal 2024 appropriations down to levels enacted two budget cycles ago, with nondefense programs taking a disproportionate hit due to overwhelming support for robust military spending within the GOP conference.
Pushing back the debt limit deadline would create space for House Republicans to bring their initial appropriations bills to the floor to demonstrate whether the party can unify behind the harsh spending medicine many in the conference are seeking.
Sources acknowledged such figures likely won’t make it through the Democrat-controlled Senate or be signed into law, at least not in time for Treasury to run out of cash by late summer. But House Republicans are insisting on some form of spending cuts or “other fiscal reforms” commensurate with the growth in spending Democrats presided over during the previous two years.
Democrats, meanwhile, have repeatedly called for Republicans to present a plan for the debt limit before there’s any talk of negotiating.
“We have to try to get together and see what we can do in a bipartisan way, that’s true,” Senate Majority Leader Charles E. Schumer, D-N.Y., said Wednesday. “But on the debt ceiling, you know what I’d say to Speaker McCarthy when we sit down: Show us your plan.”
House Majority Leader Steve Scalise, R-La., met with members of the conservative Republican Study Committee on Wednesday to talk spending curbs, among other issues. At a press conference earlier in the day he told reporters that Republicans have already been vocal about the types of cuts they’re seeking. He said Republicans want to rescind unspent COVID-19 relief dollars and go after fraud in those programs. He also made a pitch for preserving Social Security, telling reporters “we strongly believe Social Security needs to be strengthened for seniors who paid into it.”
McCarthy and other Republicans have referred repeatedly to discretionary spending caps deals enacted going back to 2011, including under divided government, that have accompanied debt ceiling increases.
In the 2011 deal cut after a financial market-rattling summer debt limit standoff, Republicans and the Obama administration agreed to 10-year discretionary caps that the Congressional Budget Office estimated at the time would save $756 billion over a decade.
Those savings were locked in prior to the “sequester” that was part of the second phase of that 2011 law, which triggered after the “supercommittee” couldn’t reach a deal on mandatory savings and tax increases. Ultimately Congress ended up loosening those caps in subsequent legislation, but discretionary funding still wound up below the baseline that CBO estimated in early 2011.
Congress has used a series of short-term debt limit increases in the past to buy time for further negotiations over fiscal packages.
In 2011, the Committee for a Responsible Federal Budget tallied up 37 instances of debt limit increases lasting six months or less, with 14 of those preceding some type of budget deal or budget-related legislation. In the run-up to the 1990 budget reconciliation package, for instance, there were six temporary debt limit laws.
However, such an approach could further rattle already-wobbly financial markets and lead to higher short-term interest rates on Treasury debt, squeezing out cash needed for other obligations.
Lindsey McPherson and Aidan Quigley contributed to this report.