Several hard-right Republican lawmakers have stated that they will oppose a deal to raise the United States’ $31.4 trillion debt ceiling. This opposition is a sign that the bipartisan agreement may face difficulty passing through Congress before the U.S. runs out of money next week. Although expected, the opposition illustrates the hurdles that Democratic President Joe Biden and top congressional Republican Kevin McCarthy will have to overcome to see the Republican-controlled House of Representatives and Democratic-controlled Senate pass the package.
The Deal Details
The 99-page bill would suspend the debt limit through Jan. 1, 2025, allowing lawmakers to set aside the politically risky issue until after the November 2024 presidential election. It would also cap some government spending over the next two years. The bill’s changes to environmental rules were criticized by some Democrats.
Opposition to the Deal
Florida Governor Ron DeSantis, a candidate for the Republican 2024 presidential nomination, said the deal does not do enough to change the fiscal trajectory. “After this deal, our country will still be careening toward bankruptcy,” he said on Fox News. Another panel member, Ralph Norman, has already come out against the agreement. One of those conservatives, Representative Chip Roy, said on Tuesday he did not support the bill. Republican Mike Lee also came out against the bill, which could point to a difficult vote there, where any member has the power to delay action for days. Democrats control the Senate by 51-49.
Prospects of the Package
Backers have predicted the bill will clear Congress before the United States runs out of money to pay its bills, which the Treasury Department says will happen on June 5. Republican Representative Dusty Johnson, who said he had talked to dozens of fellow lawmakers, stated that this thing will absolutely pass. There’s no question about that. McCarthy has predicted it will draw the support of most of his fellow Republicans, who control the House 222-213. House Democratic Leader Hakeem Jeffries said he expects support from his side of the aisle, although many on his party’s left may vote “no” as well.
Potential Impacts
Initial reaction has been positive from financial markets, which would be thrown into chaos if the United States was unable to make payments on its securities, which form the bedrock of the global financial system. Still, some investors are wary that the spending cuts secured by McCarthy could weigh on U.S. growth. Republicans have argued that steep spending cuts are necessary to curb the growth of the national debt, which at $31.4 trillion is roughly equal to the annual output of the economy. Interest payments on that debt are projected to eat up a growing share of the budget in the decades to come as an aging population pushes up health and retirement costs, according to government forecasts. The deal would not do anything to rein in those fast-growing programs. Most of the savings would come by capping spending on domestic programs like housing, border control, scientific research, and other forms of “discretionary” spending. Military spending would be allowed to increase over the next two years.
The opposition from hard-right Republicans to the deal to raise the United States’ debt ceiling illustrates the potential obstacles that Democratic President Joe Biden and top congressional Republican Kevin McCarthy will have to overcome to see the package pass through Congress. Though the initial reaction has been positive from financial markets, some investors are wary that the spending cuts secured by McCarthy could weigh on U.S. growth. Whether or not the package passes through Congress and the potential impacts it may have on the economy remains to be seen.
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