Senate Democrats used a Thursday Budget Committee hearing to ramp up attacks on a GOP bill that would raise the debt ceiling in exchange for steep spending cuts.
“Since the House didn’t hold a single hearing on this extreme and dangerous measure, the Senate will,” Senate Budget Committee Chairman Sheldon Whitehouse (D-R.I.) said at the top of the hearing, before calling the bill a “dangerous” measure that would “gut basic federal programs.”
House Republicans last month narrowly passed the Limit, Save, Grow Act, which pairs a $1.5 trillion increase in the debt limit with $4.8 trillion in spending cuts that have prompted fierce opposition from Democrats.
Democrats have referred to it as the “Default on America Act” and backed President Biden’s call for a “clean” debt ceiling increase. Senate Republicans have largely ceded the issue to the House GOP and Speaker Kevin McCarthy (R-Calif.), but the two sides traded jabs over the proposal for hours Thursday.
“It seems to me that the Republicans have taken the right approach in this effort because we do care about working Americans,” said Sen. Chuck Grassley (Iowa), top Republican on the Budget panel, while accusing Democrats’ spending policies of contributing to high inflation.
Among the proposals featured in House Republicans’ sweeping plan is a pitch to cap government funding hashed out by lawmakers as part of the annual appropriations process at fiscal 2022 levels, while also limiting spending growth to 1 percent every year for the next decade.
Other proposals featured in the bill would impose tougher work requirements for programs like Medicaid and Supplemental Nutrition Assistance Program, put an end to popular student loan actions implemented under the Biden administration, and target parts of a signature economic bill passed by Democrats last year without GOP support.
Democrats are insisting on a “clean” bill to raise the debt limit without fiscal reforms or cuts attached, instead pushing for both sides to hold separate discussions on spending cuts as part of the budget process.
“What House Republicans have voted for is one massive gift to the Chinese government. Because — guess what? Our competitors are not debating whether to pay their debts or wreck their economy,” Senate Appropriations Chair Patty Murray (D-Wash.) said.
“They are not debating whether to invest in their future, or cut, and cap, the investments that keep them competitive. They are doing everything they can to get ahead,” she added, arguing that the bill would lead to “across the board” cuts.
Republicans have said cutting funding is necessary to put the nation on a path toward fiscal responsibility, while pointing to increased government spending during the pandemic as a key driver in rising prices the nation has grappled with in the past year.
“If we don’t reduce the rate of growth of spending and debt accumulation, [Federal Reserve Chairman Jerome] Powell is gonna do what he’s got to do to get control of inflation,” Sen. John Kennedy (R-La.) said. “And he’s gonna keep raising rates. And that’s gonna put people out of work.”
Treasury Secretary Janet Yellen warned Monday that the country risks default as early as June 1 if lawmakers don’t act. The agency has been implementing “extraordinary measures” to stave off a default since January, when the national debt ran up on the roughly $31.4 trillion set by the previous Congress.
While it’s difficult to pinpoint an exact date the Treasury will exhaust those measures, Mark Zandi, chief economist of Moody’s Analytics, told lawmakers at the hearing Thursday that “there is a possibility, worst case scenario, that it will be June 1.”
“By my best calculation, June 8 will be the day when Treasury can’t pay its bills,” he said, adding the “best case scenario will be August 8.”
Biden is expected to sit down with McCarthy next week to discuss the matter, along with Senate Majority Leader Chuck Schumer (D-N.Y.), Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Hakeem Jeffries (D-N.Y.).
It will be the first time McCarthy and Biden sit down to discuss the debt limit in months amid an ongoing partisan stalemate.
Lawmakers on both sides expect more details about the path ahead after the meeting, but there is serious doubt among some members over chances of a deal anytime soon in the current climate.
The meeting will occur just days before House Budget Committee Republicans are expected to hold their own hearing to expose what they called “the woke, wasteful, and bloated democracy bureaucracy under President Biden.”
Concurrently, House Democrats are moving forward on a long-shot bid aimed at forcing a vote on hiking the debt limit despite opposition from McCarthy. But the effort would require the support of a handful of Republicans.
Drawing the necessary Republican support for the plan is a tall task for Democrats after the House GOP already passed their own proposal to raise the debt limit — but the back and forth between the parties underscores the battle lines both sides will have to contend with to strike a deal in the weeks ahead.