The high-stakes confrontation could have an impact on retirements accounts, corporations and much more.
WASHINGTON — As the White House and Republicans in Congress hammer out a path forward on raising the debt ceiling to avert an economic crisis, Texas progressives and conservatives are urging both sides to remain steadfast.
There is less than a week until June 1, the day U.S. Treasury Secretary Janet Yellen said the federal government could run out of options to finance federal programs and make interest payments. Republican House Speaker Kevin McCarthy insists that raising the debt ceiling must be paired with commitments to cut future federal spending, and he and White House officials have been chipping away at a compromise.
Economists have warned that failure to raise the debt ceiling would cause a catastrophic blow to global faith in the U.S. economy, producing a market spiral that could affect everything from retirement accounts to overseas corporations.
Democrats are blasting Republicans for using such high stakes as a bargaining chip, insisting that future spending should be negotiated separately. The debt ceiling caps borrowing to cover funding already approved by Congress and has no direct impact on future spending.
More than 60 members of the Congressional Progressive Caucus — including Reps. Greg Casar of Austin, Sheila Jackson Lee and Sylvia Garcia of Houston, and Veronica Escobar of El Paso — signed on to a letter last week urging President Joe Biden to blow past the debt ceiling and continue to borrow money to keep the government funded under a never tested interpretation of the 14th Amendment, which says the validity of the U.S. debt “shall not be questioned.”
“Not only does the debt ceiling run counter to the Constitution’s mandate that the validity of America’s public debt shall not be questioned, it contradicts the appropriations law that requires the Treasury to issue debt for the funding you are obligated to administer at Congress’s direction,” the progressives wrote.
Republicans, however, plan to continue working to force the White House and Congress to act.
U.S. Rep. Chip Roy, R-Austin, argues that the nation’s ballooning debt — now almost $31 trillion, triple the amount in 2001, adjusted for inflation — and deficit spending pose too extreme a danger to the country to ignore.
It’s a cause Roy has championed for a while. Roy was irate that Senate Republicans joined Democrats to pass a $1.7 trillion federal spending bill last year without using funding for federal government programs as leverage for conservative priorities. He threatened to tank McCarthy’s bid for speaker late last year and in January unless the Californian promised to take serious steps to address the deficit.
Likewise, Roy pushed fellow Republicans to “hold the line” on the debt ceiling and not accept anything less than a party-line debt ceiling package passed out of the House last month. That bill — the Limit, Save, Grow Act introduced by House Budget Chair Jodey Arrington of Lubbock — would raise the debt ceiling while returning federal funding to levels last seen in fiscal year 2022.
The Limit, Save, Grow Act wouldn’t cut spending to priorities like defense and Social Security, but it would likely have to slash spending for other social services as well as for education, health care and climate change mitigation.
Roy and the rest of the right-wing Freedom Caucus released a statement last week urging McCarthy to cease negotiations until the Limit, Save, Grow Act is signed into law. The bill has practically no chance in the Democratic-controlled Senate.
As reports emerged that McCarthy and Biden were approaching a compromise, Roy told KTSA on Thursday morning: “I’ve got to be honest, I’m going to have to have some blunt conversations with colleagues and some of the leadership team. I don’t like the direction they’re headed.”
Roy and U.S. Rep. Tony Gonzales, R-San Antonio, demanded that border legislation also be included in a deal to raise the debt ceiling. The Republican-led House passed a border package along party lines earlier this month that also has no chance in the Senate, with Democrats decrying the package as too punitive.
While many Democrats acknowledged concerns over the growing national debt, they warn that cutting spending so drastically would burden some of the most vulnerable Americans who are reliant on government programs.
In their letter to Biden, members of the Congressional Progressive Caucus wrote that “further deficit reductions would actually be threatened should an agreement under duress be reached with Republicans to impose drastic cuts to vital domestic programs of potentially 33 percent in 2024 that fund healthcare, nutrition, education, housing, and more. This is because such a deal could trigger an economic recession while guaranteeing catastrophic human consequences.”
House Minority Leader Hakeem Jeffries, D-New York, accused Republicans of callously playing with the economy as part of a “political calculation that they will benefit in 2024 if they crash the economy.”
“Many people are talking about this as if it’’s just a typical daily disagreement between pundits and politicians. This is not a simple political disagreement,” Casar told reporters Wednesday. “You could lose your savings. Your sibling could lose their job. Your kids could lose their house. People are going to lose their health care. For what? Because the Republicans have taken over.”
Roy said cutting back to 2022 spending levels would be manageable if Congress eliminated programs like major investments in combating climate change that Democrats passed last year. Those provisions, part of the Inflation Reduction Act, are crucial to the Biden administration’s goals of reducing carbon emissions in line with the Paris Climate Agreement.
Democrats including U.S. Rep. Lloyd Doggett, D-Austin, also denounced calls to lower federal spending hypocrisy after Republicans passed revenue-gutting tax cuts in 2017.
“Never concerned with the soaring Trump debt that they supported, their sudden interest now in deficit reduction is really about undermining education, health, environmental protections, and social service initiatives that they never supported in the first place,” Doggett said on the House floor. “Don’’t make Americans pay for Republican hypocrisy.”
Source: Texas Tribune