The House voted to raise the federal government’s borrowing limit on Wednesday as part of a package that includes a string of Republican spending-cut demands—the first step forward in a fraught negotiating process with the White House on the consequential legislation.
The House voted 217-215 to raise the federal government’s $31.4 trillion borrowing limit.
Republicans made up all votes in favor of the bill, while four GOP representatives joined all 211 Democrats present in voting against.
The federal government is expected to reach its debt ceiling sometime this summer, and if lawmakers and the White House can not agree to raising the limit, the U.S. could default on its financial obligations for the first time in history, a scenario economists warn could trigger a stock market crash and recession.
In addition to raising the federal debt ceiling by $1.5 trillion through March of next year, the legislation would cut federal funding by $130 billion in fiscal year 2024, reverse spending to fiscal year 2022 levels and limit future budget growth to 1% per year.
The House plan is dead-on-arrival in the Democratic-controlled Senate, however, and President Joe Biden has said he would veto the bill if it reaches his desk, citing his stance that he will not agree to any debt ceiling legislation attached to unrelated issues.
The House vote marks a small step forward for House Speaker Kevin McCarthy (R-Calif.), who can use the bill as a baseline negotiating tool in striking a deal with Democrats and the White House.
The federal government reached its $31.4 trillion borrowing cap in January, triggering “extraordinary measures” from the Treasury Department to stave off a default, including suspending investments in federal employee retirement plans. Congress has agreed to raise the debt ceiling several times in modern history, and the U.S. government has never defaulted on its debt. But under this year’s split Congress and a slim majority in the House—where leadership is beholden to a coalition of right-wing lawmakers who have demanded spending cuts in exchange for raising the debt limit—the threat of a default has reached new heights.
In addition to broad cuts to federal spending, the GOP-authored legislation would block key provisions of Biden’s student loan forgiveness program and roll back new funding for the Internal Revenue Service included as part of the Inflation Reduction Act.
McCarthy made a last-minute deal overnight Tuesday to win over House Republicans who threatened to tank the legislation. McCarthy agreed to enact new work requirements for welfare recipients a year earlier to appease a group of right-wing lawmakers, including Reps. Lauren Boebert (Colo.), George Santos (N.Y.), Chip Roy (Texas), Andy Biggs (Ariz.) and Matt Rosendale (Mont.). He also agreed to soften a proposed repeal of clean-energy tax cuts at the behest of a coalition of Midwestern lawmakers who have ethanol plants in their districts that benefit from the tax credits. The revisions allow the credits to continue for companies in binding contracts or those invested in clean fuel production prior to April 19, Politico reported.
Biden blasted the GOP plan in a statement Wednesday, accusing McCarthy of making “a deal with the most extreme MAGA elements of his party to accelerate taking food assistance from hundreds of thousands of older Americans.”
GOP Debt Limit Bill Could Come Up For Vote—But Republicans Could Sink It (Forbes)
McCarthy Unveils Bill To Increase Debt Limit Through 2024—While Biden Blasts Long-Shot Proposal As ‘Whacko’ (Forbes)
Federal Government Officially Reaches Debt Limit, Triggering ‘Extraordinary Measures’ To Prevent A Default—Here’s What That Means (Forbes)
