Common ground on the debt limit? Here’s what to look for
Spending caps, work requirements, clawing back unspent pandemic aid could wind up in play
The House-passed debt limit and spending cut bill won’t survive bipartisan negotiations in full. But there are some potentially salvageable pieces of the GOP measure that could end up in a final deal.
While most lawmakers in either party aren’t ready to start talking about compromise, the few who are point to work requirements for benefit programs, discretionary spending caps and a fiscal commission as potential areas for bipartisan agreement.
The work requirements and spending caps in Republicans’ bill would likely need to be softened to win Democratic support, but both parties share some interest or prior voting records on such policies.
A fiscal commission to recommend deficit reduction strategies is not in the GOP bill, but centrists in both parties keep returning to this idea as low-hanging bipartisan fruit.
To be clear, the vast majority of Democrats are not even entertaining negotiations with Republicans on debt limit conditions, as they are still insisting on a "clean" bill.
“I’ve been here during a time where we’ve done a lot of really positive bipartisan things, but on this issue … default on the full faith and credit of the United States government is not something we should ever entertain,” Sen. Mark Kelly, D-Ariz., said.
“We don’t have to give something,” Sen. Benjamin L. Cardin, D-Md., added. “I have not seen the Republicans sincere on this. What they passed is ridiculous.”
Most House Republicans, meanwhile, say it’s up to Senate Democrats to pass something if they don’t want to accept the House bill.
“We just passed a bill. It’s not our job to modify it,” Speaker Kevin McCarthy, R-Calif., said Wednesday after the House narrowly passed its bill, 217-215.
“The Senate could pass our bill or send us something that they have and we’ll go to conference. Otherwise, we’ve done our job," McCarthy continued. "We’re the only ones to lift the debt limit to make sure this economy is not in jeopardy.”
At the same time, McCarthy is still leaving his door open to direct negotiations with President Joe Biden. He said he has “no parameters” on policy attachments they could consider as long as they curb spending or grow the economy.
“The only thing I would tell him is no clean debt ceiling is going to pass the House,” McCarthy said.
Senate Republicans, whose votes Democrats would need to break a filibuster on any debt limit bill in that chamber, say direct McCarthy-Biden negotiations are what should happen next.
While “ordinarily” bipartisan deals originate in the Senate because of its filibuster rules, this debt limit is an “exception,” Sen. John Cornyn said.
“The House is never going to take anything that’s cooked up in the Senate, because they have a thin majority and they would not get the votes,” the Texas Republican said.
Few lawmakers would entertain questions about what provisions in the GOP bill are ripe for bipartisan negotiations. But some who did pointed to expanded work requirements for the Supplemental Nutrition Assistance Program and Temporary Assistance for Needy Families.
Rep. Garret Graves, R-La., said Biden voted for similar work requirements as a senator, as did other Democrats still serving in the Senate.
Republican Study Committee Chairman Kevin Hern, R-Okla., is pushing for GOP leaders to fight for all of the bill. But he said work requirements should be a top priority given their political popularity and previous Democratic support.
“I think it's one of the areas that Joe Biden is going to have a hard time pushing back on,” he said.
So far, however, West Virginia centrist Sen. Joe Manchin III is the only Democrat eager to entertain House Republicans’ ideas. He said “there’s a lot of pieces” from their bill to work with, naming work requirements as an example.
“Work requirements, basically it was not onerous on anybody that’s not able-bodied and capable of working. That’s it,” he said. “We did it with Bill Clinton. We got welfare to work.”
Spending caps or CR ‘backstop’
What Republicans seem most interested in securing in any debt limit deal is caps on discretionary spending.
McCarthy frequently notes that Democrats demanded to lift previous statutory spending caps as part of debt limit deals during the Trump administration. Republicans believe Democrats let spending run wild in the cap-free years since then.
Rep. Steny H. Hoyer, D-Md., admitted spending caps have been part of past debt limit deals and could be again here. But he said Republicans would need to agree to discuss “rational numbers,” which they haven’t so far.
Republicans’ bill would cut $131 billion from current discretionary spending levels to cap next year’s spending at $1.47 trillion, the fiscal 2022 topline. Caps for the remainder of the decade would allow for 1 percent annual growth.
Democrats may not agree with 1 percent but maybe they’d compromise around 2 percent, Rep. Don Bacon suggested. “I think that's an area that seems lucrative to negotiating,” the Nebraska Republican said.
If the parties can’t agree to spending levels, Rep. Thomas Massie said Republicans could agree to raise the debt limit in exchange for a yearlong continuing resolution at 98 percent of current funding levels.
The Kentucky Republican hesitated to support the debt limit bill because he wanted the CR “backstop” to be included, but ultimately voted for it.
“We should have used this crisis to avoid the next crisis,” he said. “We should have taken shutdown off the table.”
Some centrist Democrats besides Manchin acknowledge there will need to be bipartisan negotiations on the debt limit. But they aren’t offering up much in the way of ideas.
“Nothing comes to my mind,” Sen. Jon Tester, D-Mont., said, before floating a fiscal commission as one possibility.
Such a commission could propose goals for reducing the deficit over time “without cutting the legs off of veterans and undoing a bipartisan infrastructure bill and the Inflation Reduction Act,” he said.
The bipartisan House Problem Solvers released a debt limit framework earlier this month that relies on establishing an outside fiscal commission to develop long-term solutions for reducing the deficit, rather than expecting lawmakers to come to terms on their own.
However, that framework also expects lawmakers to come up with some short-term spending controls through the appropriations process in exchange for suspending the debt limit until a commission could be set up and produce its recommendations.
“You had 32 Democrats sign on to basically say, ‘Yeah, we need to look at spending reforms,’” Problem Solvers member Mike Lawler, R-N.Y., said.
Bacon, a fellow Problem Solver, agreed the fiscal commission could be something Democrats would support.
Several provisions in Republicans’ debt limit bill would repeal parts of Democrats’ budget reconciliation law from last year, like funding for IRS tax enforcement and most of its clean energy tax credits.
Conventional wisdom would suggest that Democrats won’t agree to any of that, but Sen. Bill Cassidy, R-La., suggested there could be some common ground on tweaks to the energy tax credits.
The Joint Committee on Taxation estimated repealing the credits would save $515 billion. The estimated cost of the policies has "ballooned," as Cassidy put it, since demand has increased since the JCT's initial projection last year.
“Is there some way to limit that?” Cassidy said.
Another option from House Republicans' bill that should get bipartisan backing is rescinding unspent pandemic aid funds, Graves said, since “the president and Democrats support … ending the COVID emergency.”
Biden was preparing to let the national and public health emergencies to address the pandemic lapse on May 11, though Republicans forced an early end to the national emergency with a Congressional Review Act joint resolution Biden signed this month.
Sen. Chris Van Hollen, D-Md., said one potential solution he thinks could pass the Senate is giving the president authority to raise the debt limit subject to congressional override.
He pointed out that Senate Minority Leader Mitch McConnell, R-Ky., has endorsed that idea in the past, including in the 2011 debt limit package that included 10-year caps on discretionary spending.
“If people don’t want to vote directly on the debt ceiling, then give President Biden the authority,” Van Hollen said. “He’s willing to make the decisions in the best interest of the country even if we don’t have a majority here willing to do that.”