Factbox-U.S. House Republicans' many proposals for spending cuts in
debt-ceiling debate
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[February 01, 2023]
By Andy Sullivan and Gram Slattery
WASHINGTON (Reuters) - Republicans who control the U.S. House of
Representatives say any increase in the United States' $31.4 trillion
debt ceiling should be paired with spending cuts, but so far are not
unified on any specific demands.
Here are a few proposals Republicans have floated ahead of House Speaker
Kevin McCarthy's Wednesday meeting with Democratic President Joe Biden:
NO CUTS TO SOCIAL SECURITY AND MEDICARE
McCarthy has said that Republicans will not try to scale back the two
largest benefit programs: Social Security, which provides payments to
retirees and the disabled; and Medicare, the health insurance program
for seniors.
That is a shift from previous budget negotiations, when Republicans
suggested raising the retirement age and partially privatizing Medicare.
It also places almost one-third of the budget off limits. Social
Security accounted for 17% of federal spending in the 2021 fiscal year,
while Medicare accounted for 13%, according to the nonpartisan
Congressional Budget Office.
DO NOT CUT DEFENSE
Republicans have traditionally supported robust military spending, and
some House lawmakers including Kay Granger and Tom Cole, the heads of
the powerful Appropriations and Rules committees, have said that defense
cuts should be off the table. That would leave another 11% of the
federal budget off limits.
ROLL BACK SPENDING TO 2022
McCarthy has proposed capping annual "discretionary" spending on
agencies such as the Defense Department and the Food and Drug
Administration at the levels that were in place in the fiscal year that
ended Sept. 30, 2022: $782 billion for defense, and $689 billion for
domestic programs.
That would amount to a cut of 9% for defense and 7% percent for
non-defense programs from the levels in place now, according to CBO
estimates. Those cuts would broaden in the years to come as spending
would not keep pace with inflation, population growth or the size of the
economy.
These cuts would not apply to benefit programs, like federal workers'
pensions and unemployment insurance.
DEEPER CUTS FOR DOMESTIC SPENDING
Chip Roy, a leader of the far-right House Freedom Caucus, has called for
keeping defense spending at current levels and cutting non-defense
spending to $661 billion, the level in place in the 2019 fiscal year.
As with McCarthy's proposal, that would effectively amount to deeper
cuts in the years to come.
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The dome of the U.S. Capitol is seen
beyond a chain fence during the partial government shutdown in
Washington, U.S., January 8, 2019. REUTERS/Kevin Lamarque/File Photo
HOLD SPENDING IN LINE WITH INFLATION
Don Bacon, a moderate Republican, has called for keeping spending
growth in line with inflation, rather than pushing for cuts that
likely will not win support in the Democratic-controlled Senate.
TIE IT TO THE ECONOMY
Brian Fitzpatrick, another moderate, advocates a bipartisan proposal
that would change the debt ceiling from a fixed dollar amount to a
percentage of national output. That would force budget cuts if
federal borrowing exceeded a set share of the economy, but he has
not said what that limit should be. Washington's debts are currently
equivalent to about 125% of one year of production across the U.S.
economy.
ANNUAL REDUCTIONS
Nancy Mace, another moderate, has called for the government to
reduce its spending by a certain percentage every year, though she
has not provided details.
PAY SOME DEBTS, BUT NOT OTHERS
Some conservatives have said that the Treasury Department could
"prioritize" some payments over others when the debt limit is
reached. Under this idea, Treasury would make interest payments to
bondholders to avoid roiling financial markets, and perhaps pay the
salaries of the military but not civilian federal workers.
Treasury Secretary Janet Yellen has said her department does not
have the technical capacity to pull this off.
RAISE THE DEBT CEILING WITH NO CUTS
This option, favored by Biden and his Democrats, has received
backing from some Republicans, notably Patrick McHenry, who chairs
the Financial Services Committee.
In December, he said he believes that serious discussions about
cutting spending are needed but he opposed having those talks in the
context of the debt limit debate.
NO DEBT CEILING INCREASE AT ALL
Some hardliners, such as Tim Burchett and Andy Biggs, have said they
will vote against raising the debt ceiling, no matter what
provisions are attached. That could make it difficult for McCarthy
to round up support for any compromise that can win support from
Biden and the Democratic-controlled Senate.
(Reporting by Andy Sullivan and Gram Slattery; Editing by Scott
Malone and Alistair Bell)
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