Republicans use sham ‘debt crisis’ to force cuts, set Biden up for blame
House Speaker Kevin McCarthy of Calif., and Senate Minority Leader Mitch McConnell of Ky., talk to reporters after meeting with President Joe Biden, Vice President Kamala Harris, House Minority Leader Hakeem Jeffries of N.Y., and Senate Majority Leader Chuck Schumer of N.Y., in the Oval Office, Tuesday, May 16, 2023. | Manuel Balce Ceneta / AP

The Republican House Majority has manufactured a “debt crisis” to force President Joe Biden and the Democratic Senate Majority to agree to draconian cuts to the federal budget. Negotiations to raise the federal debt ceiling remained at an impasse following May 16 talks between Biden and Congressional leaders.

The federal government could default on June 1 if Congress doesn’t lift the federal debt ceiling, allowing the government to borrow money and pay for programs already authorized. A default would have catastrophic consequences on the U.S. economy, the global financial system, and the well-being of millions of American working-class families. The federal government has never defaulted before.

The GOP, dominated by MAGA fascists and backed by extreme right-wing billionaires, is using “legislative terrorism” and the threat of a global financial crisis to impose $4.8 trillion in unpopular spending cuts to social safety net benefit programs, undo Democratic legislative victories like the Inflation Reduction Act, and undermine the transition to renewable energy while blocking any new taxes on the wealthy.

House Speaker Kevin McCarthy, R-Calif., is captive to the MAGA House Freedom Caucus, whose votes were critical to his narrow win as speaker. In exchange, McCarthy agreed to MAGA demands to block raising the debt ceiling and force Biden and Democrats to cap discretionary spending at 2022 levels. MAGA House members could care less if a default triggers an economic recession and results, by some estimates, in the loss of six million jobs, a surge of unemployment to 7%, and a steep hit of pensions and 401K plans, endangering retirement security for tens of millions.

Fanatical MAGA GOP House members seem gleeful at the prospect of wreaking havoc and creating a recession. They think angry voters will blame Biden and the Democrats and reward Republicans with a victory in the 2024 presidential and congressional elections.

Concessions on the table

Despite initially insisting on decoupling negotiations over the debt ceiling and the 2024 budget negotiations, Biden and Democratic Congressional leaders now seem inclined to make some budget concessions to lift the debt ceiling.

“We urge President Biden to oppose any deal that would hurt the most vulnerable people in our economy. If House Republicans were serious about reducing deficits and raising revenue, they would stop shielding the wealthy and big corporations from paying their fair share in taxes,” said Claire Guzdar, a spokesperson for ProsperUS, a coalition of over 80 major progressive organizations.

Progressive lawmakers also insist on a “clean” debt ceiling increase without giving in to GOP demands. “We have made clear publicly and privately that not just work requirements but spending cuts, broad spending cuts, these are off the table,” said Rep. Pramila Jayapal, D-Wash., the chair of the Congressional Progressive Caucus.

Biden is also under pressure from the corporate mass media, business circles, right-wing policy think tanks, and some center and right-of-center Democrats, including Sen. Joe Manchin, D-W.Va. With the House under GOP control and Democrats holding a narrow Senate majority, these forces have outsized influence.

Without a mass public outcry backing progressives, this balance of forces has weakened Biden’s ability to reject the “hostage” demands. However, by making concessions, the GOP, especially the crazy MAGA bloc, will be emboldened to “hostage take” again and escalate their demands. “It’s profoundly destructive and threatens to weaken the president,” said Rep. Alexandria Ocasio-Cortez, D-N.Y.

Meanwhile, some Senate Democrats urge Biden to invoke the 14th Amendment to raise the federal debt limit. They argue Biden has the constitutional authority to do so. Biden says he will consider such a move for the next debt crisis, but there needs to be more time to defend it against certain court challenges.

“I personally feel that we should test that, and I think that the language is very explicit in that amendment,” said Senate Judiciary Committee Chairman Dick Durbin, D-Ill.

Sham debt obsession hides unpopular agenda

The GOP is using the debt crisis to hide its unpopular economic agenda of failed trickle-down policies and making permanent the 2017 $2 trillion Trump tax cuts to the wealthiest, the largest tax cut in history. They refuse to consider revenue increases as part of the negotiations, underscoring their phony concern over reducing the deficit.

The Republicans’ sudden obsession with federal debt was absent during the Trump administration, when the deficit ballooned yearly. The deficit has exploded under the last three GOP presidents mainly because of massive tax cuts to the rich. Bush and Trump tax cuts alone added $10 trillion to the debt and are responsible for 57% of the increase in the debt ratio since 2001, according to the Center for American Progress.

Meanwhile, Biden’s policies have reduced the federal deficit, like Democratic Presidents Clinton and Obama before him. Biden’s 2024 budget proposal would reduce the deficit by $3 trillion by repealing the 2017 Trump tax cut and raising taxes on those making over $400,000 annually.

The GOP legislation forces draconian cuts on the backs of working-class Americans and especially the poorest, people of color, the disabled, children, single mothers, the elderly, veterans, and other vulnerable populations. Matching grants to states, cities, and tribal nations and funding for child care and preschool, schools, college aid, housing, medical research, transportation, air traffic control towers, and railway inspections, are drastically slashed.

The corporate mass media has adopted the GOP framing of this issue and is doing little to explain specific GOP proposals or their actual impact. They portray this as a legislative spat between equal negotiating partners and refuse to acknowledge that MAGA fascist fanatics have taken over one party. MAGA behavior is normalized, allowing the GOP to get away with undermining democracy, insanity, lies, and hypocrisy.

As a result, Americans are split on who to blame for the debt crisis, although a larger share, 39%, blame the GOP House, 36% blame Biden, and 16% blame both. Thirty-seven percent of independents blame the GOP.

The real Republican agenda

This much we do know: The GOP legislation caps federal spending at 2022 levels for ten years, which would mean an immediate cut of 13% to every federal agency. Cuts to social programs could be as high as 22% by exempting the military and border security.

Republicans want to repeal increased IRS funding passed by the last Congress, geared toward boosting the agency’s capacity to collect tens of billions in unpaid taxes by wealthy tax cheats. The government would lose these revenues if the GOP had its way.

The GOP is also demanding easy permitting of new pipelines and refineries, accelerating the production of fossil fuels, gutting pollution regulation, and slashing incentives for solar, wind, and geothermal when the transition to renewables should be accelerating.

The party is also demanding imposing work requirements for those receiving federal aid. The Republican plan could deny benefits to 1.7 million Medicaid recipients, according to the Kaiser Family Foundation. A report from the U.S. Department of Health and Human Services (HHS) predicted that 21 million individuals could face barriers to Medicaid coverage if the government imposes work requirements.

Republicans also demand “clawing back” of unspent COVID funds allocated during the pandemic. But the economic and social impact of the pandemic on public health, schools, state, and municipal finances is profound and ongoing.

“The president should not give into hostage-taking, and instead follow the lead of the majority of Americans who vastly prefer bringing in revenue through tax increases on the rich rather than making harmful spending cuts,” said Lindsay Owens, executive director of Groundwork Collaborative.

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John Bachtell
John Bachtell

John Bachtell is president of Long View Publishing Co., the publisher of People's World. He is active in electoral, labor, environmental, and social justice struggles. He grew up in Ohio, where he attended Antioch College in Yellow Springs. He currently lives in Chicago.