Republican McCarthy unveils plan to lift US debt ceiling, cut spending
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[April 20, 2023]
By Richard Cowan and Andy Sullivan
WASHINGTON (Reuters) -Republican U.S. House Speaker Kevin McCarthy on
Wednesday unveiled a plan to raise the nation's debt ceiling by $1.5
trillion and cut federal spending by three times that amount, laying out
an opening position in what is likely to be a tense partisan debate over
government borrowing.
McCarthy's proposal, which he unveiled on the floor of the House of
Representatives, would cut the total amount of domestic and military
spending to 2022 levels and cap growth at 1% annually in years to come.
It would not touch retirement and health programs that are projected to
expand dramatically as the population ages.
President Joe Biden and the Democratic-controlled Senate are likely to
reject the proposals, but McCarthy said they would serve as the basis
for negotiations between the two parties over raising the federal
government's $31.4 trillion debt limit in the coming weeks. Failure to
raise the debt ceiling would lead to default that would shake the U.S.
and world economies.
McCarthy's plan would also repeal green-energy incentives signed into
law by Biden last year, boost domestic oil and gas production and scrap
his $400 billion student-loan forgiveness effort.
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It would claw back unspent COVID-19 relief money, cancel a recent budget
increase for the Internal Revenue Service and impose stiffer work
requirements for some benefit programs.
Congress would gain greater power to block Biden administration
regulations under the proposal as well.
McCarthy said the package would lower spending by $4.5 trillion over the
coming 10 years. That would not be enough to eliminate budget deficits
that are projected to add more than $20 trillion to the national debt
over that time period.
"President Biden has a choice: Come to the table and stop playing
partisan political games, or cover his ears, refuse to negotiate and
risk bumbling his way into the first default in our nation's history,"
McCarthy said on the House floor.
He did not say when the House of Representatives, which his Republicans
control by a narrow 222-213 majority, would vote on the plan.
Biden reiterated his position that Congress should raise the $31.4
trillion debt limit without conditions, as it did three times under his
Republican predecessor, Donald Trump.
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![](../images/042023PIX/news_w97.jpg)
Speaker of the House Kevin McCarthy
(R-CA) speaks at the the New York Stock Exchange (NYSE) in New York
City, U.S., April 17, 2023. REUTERS/Brendan McDermid
![](http://archives.lincolndailynews.com/2023/Apr/20/images/ads/current/heartland_lda_040123.jpg)
"Take default off the table, and let's have a real serious, detailed
conversation about how to grow the economy, lower costs and reduce
the deficit," he said at an appearance outside Washington.
Biden's budget, released last month, would save $3 trillion over 10
years largely through tax hikes.
POTENTIAL CONSEQUENCES
The nonpartisan Committee for a Responsible Federal Budget praised
McCarthy's plan as a "realistic and extremely welcome first step."
But Democratic Representative Richard Neal dismissed it as "not
serious."
The U.S. federal government has already reached the borrowing limit
and by this summer is expected to hit a point where it will no
longer be able to meet its financial obligations without action by
the divided Congress.
Treasury Secretary Janet Yellen has warned the federal government
could run out of ways to cover its debts by as soon as early June.
The $1.5 trillion increase proposed by McCarthy could cover the
government's needs until early next year, setting the stage for
another debt ceiling fight in the midst of the 2024 presidential
election campaign.
It was unclear whether McCarthy's plan would unite House
Republicans. A sizeable contingent of hardline members have
dismissed the risks of failure to act, while others might balk at
its limits on military spending.
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A lengthy 2011 standoff over the debt ceiling led to a first-ever
downgrade of the federal government's credit rating, which rattled
markets and raised borrowing costs.
(Reporting by Richard Cowan and Andy Sullivan; Additional reporting
by Andrea Shalal in Accokeek, Maryland, and Katharine Jackson in
Washington; Writing by Andy Sullivan; Editing by Scott Malone, Nick
Macfie, Jonathan Oatis and Cynthia Osterman)
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