Republicans finally have a plan to solve the debt ceiling impasse they created. The new plan would see him raise the federal borrowing limit by $1.5 trillion over the next few years in exchange for $4.5 trillion in spending cuts. Some of the provisions cannot be initiated, but could end up as part of a final compromise with Democrats that would allow Congress to raise the federal borrowing limit and conduct business as usual. There is also a provision. This hoaxed drama is boring, but sooner or later there will be provisions that could be part of the real fiscal changes ahead that will be essential to keep federal government borrowing down to unsustainable levels. It’s worth paying attention to.
More important than the content of the Republican bill is whether House Republicans can actually pass it. If you can’t do that, then there is no Republican plan at all. President Biden and his fellow Democrats continue to insist on an unconditional increase in the federal borrowing limit, leaving Republicans with no viable alternative. If faced with the House, take the lead.
If House Speaker Kevin McCarthy can stick the needle and get the bill through the House, Democrats will have to respond with countermeasures that include efforts to cut spending, as Republicans argue. These provisions are: There is a handicap regarding parts that could end up being a compromise package.
Repeal the green energy tax credit that Democrats passed last year. Democrats still control the White House and half of Congress, and there’s no way to withdraw the bill they see as a breakthrough effort to address climate change, a big priority for many Democrats. .
Eliminate $80 billion in new funding for the Internal Revenue Service. It’s another Democratic priority meant to rebuild the IRS after years of budget shortfalls, led by Republicans in Congress. This additional funding will be crucial in catching wealthy tax fraudsters who are unable to pay the hundreds of billions of dollars they legally owe the IRS each year. Anyone who really cares about paying back the $32 trillion national debt should start by collecting all the taxes Americans legally owe.
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Repeals Biden’s executive order to cancel student loans of up to $20,000 per borrower. This was Biden’s campaign promise, and there’s no way he’d easily agree to back it. The Supreme Court may give Republicans what they want because they tend to rule that
Impose work requirements on some aid recipients. This is a continuum between Republicans, who argue that recipients of food aid and other aid to the needy should prove they want to work, and Democrats, who argue that it is humiliating and unnecessary. No fight. Either way, Democrats won’t budge, and Republicans know it.
Get back your unused COVID aid. About $91 billion of the $4.2 trillion in COVID relief handed out between 2022 and 2022 remains unused, according to the Government Accountability Office. In Washington’s terms, it’s not much, but reversing that spending could be a budget-cutting gesture that doesn’t do much harm in the real world.
Reduce spending by $130 billion in fiscal 2024. These spending cuts do not affect Social Security, Medicare, or National Defense. Plus, $130 billion isn’t much in the total he’s nearly $7 trillion federal budget. viable.
Limit budget increases to 1% for 10 years. This is non-binding, as future parliaments can change the laws passed by previous parliaments at any time. So this is his one way, and easy way, for the Congressman to pretend to be a budget hawk.
Return discretionary spending to 2022 levelsIbid. “Discretionary” spending exempts Social Security and Medicare from paying benefits each year without requiring congressional action. The current Congress can set this limit, but future Congresses can remove it.
Strengthen domestic oil and gas production. House Republicans have already passed legislation aimed at boosting US energy production, including allowing reforms to make it easier to build oil pipelines and other types of infrastructure. This includes the removal of the same Biden green energy tax credit as the debt ceiling plan, and they are going nowhere. But there is an opportunity to allow energy bill reform and other elements. These same sanctioned reforms have something for Democrats because they benefit building clean energy infrastructure. Additionally, Biden has come closer to the idea of securing more domestic energy for the next few decades until renewable energy is more fully developed. He was able to swallow some of this.
Raising the borrowing limit by $1.5 trillion, as the Republican plan calls for, will only buy about a year’s worth of time and is not enough. Congress will then be forced to go through this whole ordeal all over again as the 2024 election heats up. Even many Republicans don’t want it. So the final deal will probably raise his borrowing limit by an amount sufficient to reach him by the end of 2024 or early 2025 (say he’s $2.5 trillion). We don’t know exactly how this episode will end, but a sequel for sure.
Rick Newman Yahoo FinanceFollow him on Twitter. @rickjnewman
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