Fresh off taking control of the House, congressional Republicans are refusing to raise the debt ceiling — a failure that would put the government in default and crash our economy — unless they get deep cuts to social programs.
That’s fiscal terrorism. And President Biden must reject it.
The debt ceiling does not reduce government expenses — it only makes it harder for the government to pay its bills, which is a legal obligation. Publicly, Biden and congressional Democrats are saying they won’t negotiate over it. Yet Biden met recently with House Speaker Rep. Kevin McCarthy (R-Calif.) about it and has said talks will continue.
McCarthy made a deal for votes with the most extreme members of his conference to hold the debt ceiling hostage to cuts. He could lose his Speakership if he doesn’t get some blood from slashing programs for average U.S. families.
Biden shouldn’t help him.
If he does, Biden will be repeating one of the greatest sins of his vice presidency during the Obama administration: making a deal with the devil that will cause unnecessary pain to U.S. families.
When our country was still struggling to emerge from the Great Recession, Republicans pulled a similar debt ceiling gambit. Then-Vice President Biden led the administration’s negotiations and paid the GOP’s ransom.
The result was the Budget Control Act of 2011, which capped government spending, regardless of need, for 10 years. That led to painful, unnecessary austerity measures that dragged our economic recovery out another five-plus years. Social spending still hasn’t caught up to 2010 levels when adjusted for inflation and population growth.
Military and non-military programs were supposed to feel the pinch equally, but ultimately only American families paid the price. Lawmakers got around the Pentagon cuts by funneling nearly $900 billion into a slush fund called “Overseas Contingency Operations.”
Today, the deal McCarthy made with hardliners would cap federal spending at fiscal year 2022 spending levels in exchange for meeting their legal obligation to pay the nation’s debts. This would result in a roughly 9 percent cut across all programs if distributed evenly across both defense and non-defense spending.
Yet most of the defense spending will almost certainly be exempted — McCarthy has mentioned defense cuts only in the context of cutting “wokeism” at the Pentagon, as well as efforts to use renewable fuels in the military. (No, this doesn’t make any sense.)
If military spending gets a pass, the Center on Budget and Policy Priorities estimates the cuts to social programs could reach over 24 percent — an utterly cruel cut to families still grappling with underfunding, inflation and the end of pandemic-era supports.
Such a drastic move would also erase all of the increases in the critical investments just passed in December in the fiscal year 2023 budget, with bipartisan support. This includes funding for: highways and bridges, cracking down on corporate union busting, Pell grants for poor and first-generation college students, support for child care and Head Start grants, opioid and substance abuse treatment, efforts to provide housing and food, and much, much more — even administering Social Security and Medicare benefits!
McCarthy made a deal with the devil — but Biden should know by now that he must not do the same. The president may be tempted to settle for a budget freeze and claim victory in preventing short-term GOP cuts to Social Security and Medicare, but the truth is that these other cuts could do just as much damage to American families.
If Biden gives in, he’ll be as much to blame for a possible recession and spiking economic hardship as McCarthy and his party of extremists will be.
Instead, we should do the right thing: Lift the debt ceiling without preconditions and invest properly in our well-being. And then abolish the debt ceiling entirely, so it can never be used as a political cudgel again.
Karen Dolan is a fellow at the Institute for Policy Studies.