Law, spending cap plans tied by GOP to debt limitation agreement

Changes to Social Security and Medicare eligibility, spending limits and safety net work requirements are among the top priorities for leading House Republicans who want to use the debt limit deadline. next year to win concessions from the Democrats.

The four Republicans interested in chairing the House Budget Committee in the next Congress have said in interviews that next year’s deadline to raise or suspend the debt ceiling is a leverage point if their party can take control of the House in November’s midterm elections.

The Republican position – which members are still formulating – could set the stage for an explosive stalemate next year, reminiscent of negotiations in 2011 when the wave of Tea Party Republicans attacked the Obama administration over spending.

It’s also possible that Republicans will push for process-oriented legislation — such as requiring a reduction in the debt-to-GDP ratio — that could then put major rights programs in play.

If Congress does not raise or suspend the debt ceiling by the deadline, the federal government would default on payments officials had already agreed to make. Treasury Secretary Janet Yellen warned during 2021 negotiations that a default would be “a disaster” and could cause a financial crisis.

“The debt limit is clearly one of those tools that Republicans — that a Republican-controlled Congress — will use to make sure that we do everything we can to make this economy strong,” said the Rep. Jason Smith (R-Mo.), the senior member of the House Budget Committee. He is seeking the GOP’s top spot on the tax-drafting ways and means committee, but said if he doesn’t get it, he’ll stay in his position on the budget committee.

Photographer: Al Drago/Bloomberg

Rep. Jason Smith (R-Mo.) wants to use the debt limit talks to extract concessions from Democrats on fees and spending.

Representatives Jodey Arrington (R-Texas), Buddy Carter (R-Ga.) and Lloyd Smucker (R-Pa.) are seeking the top spot on the budget committee if Smith gets the ways and means role. These three agreed-upon Republicans must use the debt deadline to enact fiscally conservative legislation. Rep. Kevin Hern (R-Okla.), head of the Republican Review Committee’s budget and spending task force, also said the upcoming debt deadline is “obviously a leverage point.”

Republican lawmakers have already begun discussing the potential outcomes of their debt limitation demands, Smucker said, including, “What would we consider a victory? What would we consider a fiscally responsible budget? »

Making such sweeping changes to people’s rights programs could be politically perilous, one of the reasons such proposals have failed in the past. The ideas have already become campaign fodder for Democrats, with President Joe Biden warning that Republicans would put Social Security and Medicare “on the chopping block.”

Republicans acknowledged the risk, with Arrington saying that if members come up with too many specific approaches, “it can get so politicized.” This time, Smucker said high inflation after record deficits could give conservatives the political will to seek the ambitious cuts needed to reduce public spending.

Focus on rights

Social Security and Medicare need to be addressed in the near future, some lawmakers said. “Our primary focus has to be non-discretionary — it has to be about rights,” Carter said.

A bipartisan negotiation on Social Security and Medicare would likely start with Democrats pushing for more revenue, while “Republicans have a list of eligibility reforms, and we don’t like tax increases “, Arrington said. He said raising the age of eligibility for both programs would be a common-sense change.

Cutting benefits for wealthier Americans could also cut costs, Smucker said.

“We have to make sure we deliver on the promises that were made to the people who really need it, the people who depend on it,” Smucker said. “So some sort of resource test would potentially help ensure that we can do that.”

Social Security and Medicare are the two largest mandatory expenditures — formula-based programs that aren’t negotiated annually by Congress, unlike discretionary funds. Some of the trust funds that help support the programs could run out of money over the next 12 years, leading to cuts in benefits. The Social Security Old Age and Survivors Insurance Trust Fund is expected to be exhausted after 2034, according to the program board. The Medicare Hospital Insurance Trust Fund is projected run out of funds in 2028.

The Republican Study Committee, the largest group of House Republicans, released a budget plan in June, which called on lawmakers to gradually raise the Medicare eligibility age to 67 and Social Security eligibility to 70 before indexing both to life expectancy. He supported withholding payments to those who took early retirement and whose income exceeded a certain limit. And he endorsed exploring options to reduce the payroll taxes that fund Social Security and redirect them to private alternatives. He also urged lawmakers to “phase in increased means testing” for Medicare.

Speaker Nancy Pelosi (D-California) said the proposals constitute the privatization of Social Security and “the end of Medicare as we know it.”

“House Republicans are openly threatening economic disaster in order to fulfill their obsession with cutting Medicare and Social Security,” Henry Connelly, a spokesman for Pelosi, said in a government statement Tuesday. Bloomberg . “As the House Republican leaders’ own words consistently reveal, dismantling the pillars of financial security for America’s seniors is not a fringe vision in the extreme MAGA House GOP, it’s a widespread obsession in the core of their legislative agenda.”

Smith said Republicans would focus on “protecting and preserving” Social Security and Medicare, but he declined to say specifically whether he supports the RSC’s proposal to raise the age of eligibility. He basically said Republicans would find “innovative ways to reduce the cost of health care.”

Work requirements

A conservative overhaul of welfare — focused on work requirements or other cost-cutting measures — could serve as a low-hanging fruit for Republicans seeking spending cuts, members said.

Smith said Republicans should focus on “welfare reform, ensuring work requirements are put in place for healthy, able-bodied adults. We need to ensure that income verification is in place for social assistance programs.

Arrington pointed out work requirements for able-bodied adults with no dependents to receive benefits from the Supplemental Nutrition Assistance Program, formerly known as Food Stamps. The Trump administration in 2019 imposed a rule overruling states’ ability to waive work requirements — but Trump backed away from those at the height of the pandemic in 2020. Arrington said lawmakers should write those restrictions into law .

The SNAP proposals could turn the Farm Bill, which is due for reauthorization in 2023, into another point of contention, Arrington said.

Spending limits

Another way to reduce federal spending would be for Congress to impose caps on discretionary spending, as lawmakers did after debt limit negotiations in 2011, Smith and Arrington said. These limits were regularly increased and expired after 10 years.

Arrington introduced a bill end of September to impose statutory caps on discretionary spending, which would limit funds to just under $1.6 trillion for fiscal year 2023 and limit growth to 2% per year for 10 years.

Smith was one of the principal authors of a letter during debt ceiling negotiations in 2021, calling for any increases or suspensions to be accompanied by discretionary spending limits, a statutory cap on the annual federal deficit, and a constitutional balanced budget amendment, among other measures.

Discretionary spending has accounted for 25-30% of federal spending in recent years. Some members said capping this part of the budget would not be as effective as overhauling Social Security and Medicare.

“I wouldn’t describe it as a distraction, but I’m not sure that’s where our primary focus should be,” Carter said.

Defense spending, which is part of the discretionary budget, would continue to be a high priority for Republicans. Arrington said non-defense programs should be cut to increase military funds and stay within proposed spending caps.

Wider measurements

Republicans have also offered plans to set budget targets or form committees that could indirectly lead to major policy changes, such as Smith’s proposed balanced budget amendment or capping annual deficits.

Formal debt-to-GDP targets are another popular measure for Republicans. Arrington co-sponsored a invoice with Rep. Scott Peters (D-California) automatically sending the president legislation to suspend the debt limit if Congress passes a budget resolution that would reduce the debt-to-GDP ratio by 5% of GDP within 10 years.

Arrington also welcomed a bipartisan bill introduced in both houses that would establish committees to advance legislation to bolster the solvency of one of the key federal trust funds that is expected to deplete its reserves over the next 14 years.

But Smith countered that “the American people are tired of a new committee being formed to try to solve the problems.”

Carter said he would prefer to turn the House Budget Committee into “an All-Star committee” by requiring each authorization committee to have one member.

Democrats don’t have a plan to anticipate a 2023 stalemate on the debt ceiling. House Budget Chairman John Yarmuth (D-Ky.), who is retiring, and Sen. Tim Kaine (D-Va.), a member of the budget committee, both said there is no had been no meaningful discussion of the attempt to raise or suspend the debt ceiling in the lame duck session.

“Since 2011, there have always been requests,” Kaine said. “So it doesn’t surprise me.”

To contact the reporter on this story: Jack Fitzpatrick in washington at [email protected]

To contact the editors responsible for this story: Bennett Roth at [email protected]; Sarah Babbage at [email protected]

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John A. Bogar