America's Talking - McCarthy Lays Out Republican Debt Ceiling Plan

Episode Date: April 22, 2023

U.S. House Speaker Kevin McCarthy, R-Calif., said Monday Republicans will vote to cut federal spending when it agrees to raise the debt ceiling, setting the stage for a pending political struggle over growing federal debt and what to do about it. Support this podcast: https://podcasters.spotify.com/pod/show/america-in-focus/support Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Greetings, everyone, and welcome to American Focus, powered by the Center Square. I'm Dan McAulb, executive editor of the Center Square Newswire Service. Joining me today is Casey Harper, our Washington, D.C. Bureau Chief. Casey, there's a looming deadline for Congress to raise the debt limit or the U.S. will default on its loans. U.S. House Speaker Kevin McCarthy, a Republican from California, this week, introduced a plan to cut federal spending when Congress does agree to raise the debt. that ceiling. Tell us about his plan. Yeah, high school seniors with English papers and members of Congress have something in common, and that is they like to procrastinate. So we are coming down to to the wire. That was a great joke, Dan. I really worked on that craft late last night. I have to hold in my laughter here. Yeah, I know. Right. You've gotten really good at holding in your laughter, my joke. I guess a lot of practice. So Congress has been given this deadline by the Treasury

Secretary Janet Yellen a while back actually. And she said, hey, and this is how this happens at a pretty regular interval now because the Congress doesn't pass budgets anymore, which is a huge dysfunctional problem. And basically what Janet Yellen, Treasury Secretary for Biden, says, you know, we're coming up on this deadline. You know, she doesn't give an exact day, but it was kind of like a spring, spring situation where if we don't raise the debt limit, then we are going to default on our debt. So we owe people, you know, we owe people around the world, money is the federal government. And we have a perfect credit score is the way to think about it, a bond rating. But But if we don't rate, but there's also a limit legally on the amount of money that the U.S. can borrow.

And so if we don't raise our debt limit, then we're not going to be able to borrow more money and pay our debtors, which is kind of funny. That's how bad our debt is that we can't keep going unless we just keep raising the debt limit, like every year or two. So if we don't do this, we're going to default on our debt obligations, which would cause possibly, I mean, a recession if we're not anyone already. It would hurt our credit score, like, be very bad for our credit score. It would be very bad for the global economy because the global economy. because the global economy is so based on the U.S. dollar and the U.S. economy, at least for now, although a lot of nations overseas are moving away from the U.S. dollar, which is its own catastrophe economically for the U.S.

So, you know, we have a lot of landmines. We're dancing around with our economy, our debt and all these, the inflation and things right now. But this is one we cannot step on in the eyes of most experts. And so we've got this deadline coming up. Biden has said, hey, this is too important. I'm not going to negotiate on it because, you know, we can't play chicken or something. with the credit score of the United States. Now Republicans have said, hey, you can't just say, I'm not negotiating. That's not leadership. And if it's what's really important is our debt in cutting

spending. And so Republicans this week under House Speaker Kevin McCarthy's leadership introduced this bill. It's called the Limit Save Grow Act. It's over 300 pages. It lifts the debt limit by $1.5 trillion, which would get us through March of 2024, which is important. You know, we can talk about it. That's important. It is the election year. It'll put Biden's feet to the fire. It could give Republicans leverage to really extort Biden in an election year, which is an interesting political side note. And it also, it cuts spending. McCarthy says it cut spending by about $4.5 trillion, which is pretty significant spending cuts. He doesn't want to touch Medicaid, Social Security. It doesn't really solve all the problems of the U.S. debt, but it is a pretty significant cut. So the question is,

is Biden actually going to negotiate? Can this get some traction in the Senate? But what really changed this week is the ball is really in Democrats' court now, maybe in the Senate's court, but definitely in Biden's court. And House Republicans have put the onus on them, say, hey, the deadline is here. We put our plan out. It's in writing. We voted on it. Your move, Biden. That's basically where we are now. Of course, U.S. debt is already at about $31.5 trillion, approaching $32 trillion. We have a massive budget deficit. If you or I amass such debt, we'd have declare bankruptcy. It seems like the logical answer to our current situation is cutting spending. Well, the word you use that's problematic is logical. So you kind of, you have a false assumption

that DC is operating based on logic and what's best for the country and reason and that kind of stuff. And when sadly, it's more operated based on political wins and who's looking good in the news cycle today. So I think everyone won't probably agree that they want to cut spending and that it's needed, but it's, it goes back to the procrastination thing. It's like, you know you have to do your taxes. And everyone in your family knows that you have to do your taxes. But until April 15th or this year, April 18, there's millions of people who just won't do their taxes until the last day because they need that hard deadline of that threat of, you know, basically jail or fine from the federal government to do their taxes. The problem is, Congress can always just file for an extension,

which is basically what they're doing. If you need, that's what I'm doing these resolutions are. They don't pass, you know, cut spending. They can just kick it down the road. So, There's kind of bad incentives now where nobody wants to be the lawmaker calling for cutting spending when everyone else is saying voting for raises. This is kind of a problem with democracy that a lot of philosophers in Western tradition wrote about and even the founders were concerned about that once the voters realize they can just give themselves, vote themselves a raise, democracies can crumble. And it's actually why we were more modeled like a republic and senators were appointed, not elected because of the fear that mobs and total democratic rule would lead to financial ruin. It was actually expressly warned about and acknowledged as a concern by the founders, and we're living it out now. So, yeah, it's not great. And it's not just the Democrats either. Republicans are very guilty of this. People will say they want to cut spending, but nobody can agree what it is. And they all have their one thing they won't cut. So there's a lot of Republicans who will never cut defense spending. There's a lot of Democrats who will only want to cut defense spending. And so they're all kind of hypocritical in their own ways. And our grandchildren will probably pay the price. Thank you for your insight, Casey, but we are out of time. Listeners, can you keep up with this? story and more at thecenter square.com or Casey Harper. I'm Dan McHale. Please subscribe and thank you for listening.