Debt ceiling showdowns are ready for comeback with GOP majority

House Republicans are looking to use a vote on raising the debt ceiling, a must-pass measure to avoid stark economic consequences and damaging credit of the United States, to get concessions on spending cuts if they win control of the chamber in the midterm elections. 

The federal government is expected to reach the $31.4 trillion debt limit, last increased in 2021, sometime in 2023. House Minority Leader Kevin McCarthy (R-Calif.), who is likely to become Speaker should the GOP take the lower chamber in November, is preparing for a battle with the Biden administration over curbing spending as a condition for a debt ceiling increase. 

“We’ll provide you more money, but you got to change your current behavior. We’re not just going to keep lifting your credit card limit, right?” McCarthy told Punchbowl News in an interview last week. 

Republicans have long sought spending concessions in exchange for voting to raise the debt limit or tried to force Democrats to raise the limit without help from the GOP. But Democrats have criticized the GOP for these efforts, noting that they voted to raise the debt ceiling under former President Trump. 

While the U.S. has never defaulted on its obligations, it is a scenario that economists say could result in economic turmoil. But the standoffs alone have triggered nervousness on Wall Street and in the business community. During a debt ceiling standoff in 2011, credit rating agency S&P downgraded its rating for the U.S. for the first time. 

“I’m pretty sure Republican voters don’t want their new majority to be shy about using leverage against Democrats,” said Rep. Dan Bishop (R-N.C.), a member of the hard-line conservative House Freedom Caucus. 

That sentiment extends across the House GOP conference. 

“We will make sure the federal government pays its debts, but we will use the debt ceiling as it was intended — a lever to address our deficit and debt,” said Rep. Adrian Smith (R-Neb.). 

Rep. Jason Smith (R-Mo.), ranking member on the House Budget Committee, noted figures from the Congressional Budget Office showing spending growing by $10 trillion during Biden’s presidency. An increase to the debt limit has been tied to demands to cut spending in Washington in the past, he said. 

“The American people expect Congress to use every tool at its disposal to combat rising prices, to strengthen our economy, to secure our border, to bring down the cost of energy, to fix our supply chains, and to right size the federal government, and the debt ceiling absolutely is one of those tools,” Smith said in a statement.  

Both Adrian and Jason Smith are vying to lead Republicans on the powerful Ways and Means Committee next year. 

Exactly what spending Republicans would put on the chopping block in a future debt ceiling fight is not set in stone, but likely targets include spending key to President Biden’s domestic agenda passed in the last year. 

Bishop pointed to reversing Biden’s cancellation of student debt, cutting a boost to IRS enforcement funding, and a $20,600 State Department grant to a cultural center in Ecuador that would reportedly fund a drag show performance. 

Democrats in midterm campaign messaging have warned that Republicans would use a debt ceiling fight to cut Social Security and Medicare. They point to comments from some members of the GOP and proposals in a model federal budget from the Republican Study Committee, the largest conservative caucus in the House, that included gradually raising the Social Security eligibility age. 

Biden repeated those warnings on Friday.  

“I will not yield,” Biden said, on a future debt limit fight. “I will not cut Social Security. I will not cut Medicare.” 

When asked whether entitlement programs would be part of debt ceiling negotiations, McCarthy told Punchbowl News that he would not “predetermine” anything. But the next day on MSNBC, McCarthy appeared to walk back his comments linking entitlements to entitlement reform.  

“The only people talking about cutting Social Security and Medicare right now are the Democrats using it as a scare tactic because they can’t defend their failed economic policies,” said Rep. Adrian Smith. 

Rep. Jim Banks (R-Ind.), chairman of the Republican Study Committee and a contender for House GOP whip if Republicans win, said at a CBS News event on Wednesday that the debt ceiling could be used to call for spending caps, balanced budgets, or to cut discretionary spending — actions that would not include Social Security and Medicare. 

In the midst of a dispute over raising the debt ceiling last year, Treasury Secretary Janet Yellen suggested abolishing the federal debt limit, calling it “very destructive” to the credit of the U.S. 

Rep. Brendan Boyle (D-Pa.) led a letter to House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Charles Schumer (D-N.Y.) asking for action on legislation to do just that, Punchbowl News reported on Friday. 

But Biden on Friday said it would be “irresponsible” to eliminate the debt ceiling. 

Democrats could avoid a debt limit standoff by increasing the limit after the midterms and before the end of the year. With a looming government funding deadline in mid-December, however, Democratic leaders may decide there isn’t enough time on the schedule for an early debt ceiling fight.