President Joe Biden is already set to veto a bill favored by House Speaker Kevin McCarthy (R-Calif.) to pair spending cuts with an increase to the federal debt limit.
Last week, House Republicans released their plan for a debt limit increase—the Limit, Save, Grow Act of 2023. The Republican bill allows the United States to add up to $1.5 trillion in additional debt until March 31, 2024. In exchange, Republicans say the legislation would provide more than $4.5 trillion in savings to American taxpayers.
On Tuesday the White House Office of Management and Budget (OMB) released a Statement of Administrative Policy, rejecting the legislation and vowing a veto from the president’s office if the bill passes in both the Republican-majority House and the Democrat-majority Senate. The Biden administration has repeatedly insisted on a “clean” debt limit increase, refusing any proposals to cut spending or reform government programs even as the United States has racked up approximately $30.5 trillion in debt.
The OMB statement compared the debt negotiations to a hostage situation, saying, “The President has been clear that he will not accept such attempts at hostage-taking.”
“House Republicans must take default off the table and address the debt limit without demands and conditions, just as the Congress did three times during the prior Administration,” the statement added.
The Republican proposal would achieve much of its spending reductions by cutting funding from Biden’s budget priorities. The bill would specifically set annual discretionary spending at Fiscal Year 2022 levels and would regulate discretionary spending growth to 1 percent annually over the next decade. The bill would also rescind any unspent pandemic-era relief funds, and prohibit executive actions Biden has taken to cancel student loans.
Clean energy tax credit expansions in the Biden-backed 2022 Inflation Reduction Act (IRA) would also go away. The Republican bill would also rescind funding increases for the Internal Revenue Service (IRS).
The OMB said the Republican debt proposal would require “hard-working Americans, the middle-class, seniors, children, and people with disabilities to shoulder the burden of devastating cuts, while doing nothing to ensure that wealthy or large corporations pay their fair share.”
“In fact, per an estimate by the Congressional Budget Office, the bill would enable wealthy people and large corporations to cheat on more than $100 billion in taxes over the next decade,” the OMB statement added.
The OMB statement also claimed the Republican bill would risk a U.S. default on its debt. McCarthy spokesman Chad Gilmartin disputed that claim, writing on Twitter that Biden is threatening to veto “the only plan that avoids default.”
Some Democrats Say Biden Should Negotiate
While Democrats have not endorsed the Republican proposal for reforming federal spending, some have rejected Biden’s position of a no-conditions increase to the federal debt limit.
McCarthy’s office released a statement on Monday noting at least 11 Democratic lawmakers have voiced support for Biden and McCarthy to sit down and negotiate at some level on the debt.
“Our elected leaders must stop with the political games, work together and negotiate a compromise,” Sen. Joe Manchin (D-W.Va.) said in one of the examples McCarthy’s office listed. “Instead, it has been more than 78 days since President Biden last met with Speaker McCarthy. This signals a deficiency of leadership, and it must change.”
McCarthy’s office noted an interview with CNN over the weekend, in which Sen. Amie Klobuchar (D-Minn.) said, “Of course President Biden should sit down with Speaker McCarthy” to negotiate on the debt.
“I respect the White House position, but not in perpetuity. Because negotiation, that’s what this whole institution is about,” Rep. Dean Phillips (D-Minn.) said in a recent Axios interview.
On Tuesday, after the OMB announced Biden’s veto position, McCarthy wrote on Twitter, “As a Senator, Joe Biden voted multiple times for debt limit increases that were attached to spending reforms. What changed, Mr. President?”
Not All Republicans On Board With McCarthy
While Republicans hold the majority in the House of Representatives, it remains to be seen if the McCarthy-backed plan will garner the 218 votes needed to pass in the narrowly divided House.
“It’s not going to be easy. Every dollar spent has an advocate up here,” Rep. Ralph Norman (R-S.C.) said in an April 18 interview with NTD.
On Thursday, NBC News reported that Rep. Tony Gonzales (R-Texas)—who represents a swing district—is “undecided.”
Rep. Nancy Mace (R-S.C.), another swing district Republican, indicated she’s leaning against the bill because it doesn’t balance the budget. Mace also indicated concerns over the bill’s cuts to energy tax credits.
“In South Carolina we have a lot of solar—solar farms, solar panels, consumer and commercial. And what will that do?” Mace said, per NBC. “Will those policies in that package adversely affect the state of South Carolina?”