House Republicans Propose $1.5 Trillion Debt Limit Hike With Domestic Program Cuts

Speaker Kevin McCarthy proposes a plan which is so-called “Limit, Save, Grow Act”, to raise the national debt limit by $1.5 trillion, which would require cuts across domestic programs. The package would raise the $31.4 trillion debt limit by an additional $1.5 trillion, with the stipulation that if the new debt limit is not breached by March 31, 2024, then Congress must again increase the borrowing authority by that date, potentially reigniting a major fiscal battle in the middle of a presidential election year.

The GOP’s “Limit, Save, Grow Act” includes cuts to domestic programs, but the Pentagon’s budget is spared. The 320-page bill also blocks President Joe Biden’s plan to grant student loan forgiveness and repeal green energy tax credits, among other proposals. It includes new work requirements for the Medicaid program and gives Congress more power to halt regulations from the executive branch. The plan would expedite new oil drilling projects while rescinding funding enacted to respond to the Covid-19 pandemic.

The House GOP’s “Limit, Save, Grow Act” aims to save $4.5 trillion, but official estimates have not yet been released. Many Republicans in the House have yet to decide whether to support the bill. This proposal tests McCarthy’s young speakership, as the White House has insisted on raising the borrowing limit without any conditions, a position that the House GOP has rejected.

Despite having no chance of passing the Democratic-led Senate and being attacked by Biden, McCarthy believes that passing the bill in the House would strengthen his position and force Biden to negotiate a spending cut package before a default occurs as soon as this summer.

The plan is not without its critics, however. Some lawmakers expressed concern about the risk of proposing a yearlong hike and the potential for reigniting a major fiscal battle in the middle of a presidential election year.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Source