McCarthy's bill for the looming debt limit would slash federal spending

House Speaker Kevin McCarthy, R-Calif., has released a legislative framework to raise the nation's debt limit for one year, while scaling back federal spending.

The proposal, entitled the "Limit, Save, Grow Act of 2023," would raise the debt limit by $1.5 trillion or through March 31 of 2024 — whichever comes first —return discretionary spending to 2022 levels, and limit the growth of spending to 1% annually.

"Limited government spending will reduce inflation and restore fiscal discipline in Washington," McCarthy said on the House floor Wednesday afternoon. "If Washington wants to spend more, it will have to come together and find savings elsewhere — just like every single household in America."

Lifting the debt limit for a year would put its next expiration in the heart of the presidential campaign season.

McCarthy, whose remarks echoed a speech he gave at the New York Stock Exchange on Monday, said the plan would also repeal key parts of Democrats' signature legislative package — the Inflation Reduction Act — as well as President Biden's program to cancel college student debt, which is currently tied up in courts.

The GOP bill would target the $80 billion aimed at improving the Internal Revenue Service — which Democrats approved last year as part of the IRA aimed at easing up on the agency's backlog. House Republicans voted to undo the legislation, even though it would not have passed in the Senate. The nonpartisan Congressional Budget Office has estimated the allocated $80 billion over 10 years for the IRS would increase revenues, and that repealing the measure would actually contribute to the deficit.

McCarthy plans to bring the legislation to the floor next week and said he's confident he has the support of the GOP conference to pass it. With narrow control of the chamber, McCarthy can only afford to lose a handful of members of his conference in order to pass the legislation without Democratic support.

He noted Medicare and Social Security — two programs that have broad public support but are also major drivers of spending — would not be impacted by the cuts.

McCarthy's framework also includes work requirements for adults without dependents who are enrolled in federal assistance programs.

"Our plan ensures adults without dependents earn a paycheck and learn new skills," he said. "By restoring these commonsense measures, we can help more Americans earn a paycheck, learn new skills, reduce childhood poverty and rebuild the workforce."

Democrats remain critical of any efforts to link debt ceiling negotiations to legislation that would require work requirements for those on assistance programs.

"Let me be perfectly clear: Holding food assistance hostage for those who depend on it — including 15.3 million of our children, 5.8 million of our seniors and 1.2 million of our veterans — in exchange for increasing the debt limit is a nonstarter," David Scott, D-Ga., House Agriculture Committee ranking member, said of McCarthy's proposal for work requirements.

"By including these radical proposals as a lever in debt limit negotiations, Speaker McCarthy and his extreme Republican colleagues are ensuring their failure," he said.

In his speech, McCarthy blasted the president for not meeting with him to negotiate. The pair last met in February and remain at odds over how to address the debt limit.

"President Biden has a choice: Come to the table and stop playing partisan political games, or cover his ears, refuse to negotiate and risk bumbling his way into the first default in our nation's history," McCarthy said.

Biden has repeatedly said he wants to sign a clean debt limit bill. Senate Majority Leader Chuck Schumer, D-N.Y., has also said that efforts to address spending cuts "belong in the discussion about budget, not as a precondition for avoiding default."

Even if McCarthy's bill passes the House, it is very unlikely to advance in the Democratic-controlled Senate. But passing the bill could put political pressure on Biden to return to the negotiating table.

The U.S. hit its current debt limit — $31 trillion — in January. The Treasury Department is employing what it refers to as extraordinary measures to essentially act as a band-aid for several months. Those measures are set to run out in early summer. Should Congress fail to raise the debt limit by then, there would be an unprecedented debt default, something that would throw worldwide financial markets into dire straits and likely lead to a recession.

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