Republicans have Very Serious budget demands. Unfortunately, they can’t identify what any of those demands are.
Sorting out the country’s fiscal challenges is a worthwhile goal – one that should be achieved through the usual process lawmakers use for spending and taxation decisions, i.e., the budget process. There is no universe, though, in which holding the debt limit hostage (i.e., threatening not to pay our bills) would promote greater fiscal health.
A U.S. debt default would be catastrophic. It would likely lead to higher borrowing costs for the United States (which, perversely, would worsen our long-term debt problems). Reneging on our bills might also trigger a recession and panic in financial markets. Essentially paying off Republicans to not trigger an economic meltdown creates terrible incentives for future negotiations. We wouldn’t expect Democrats to blithely offer up a ransom if Republicans were threatening to blow up the Washington Monument; neither should Democrats reward Republicans for threatening to detonate the global financial system.
And even if Democrats wanted to pay a ransom for this hostage, it’s unclear that there’s any ransom Republicans would accept.
Republicans say they want lower deficits — in fact, they have pledged to balance the budget (that is, no deficit at all) within seven or 10 years. But they have not laid out any plausible mathematical path for arriving at that destination. They promise to cut “wasteful spending” ... but can’t agree on what counts as “waste.”
Some Republican House members want to cut military spending, which both House Speaker Kevin McCarthy (Calif.) and Rep. Jim Jordan (Ohio) have indicated they’re on board with. But others, including influential House Appropriations Chairwoman Kay Granger (Tex.), have said defense spending cuts are definitely not on the table.
“We’ve got to get spending under control, but we are not going to do it on the backs of our troops and our military,” Rep. Michael Waltz (R-Fla.) said.
Instead, Waltz said, Republicans should focus on “entitlements programs,” jargon for mandatory spending programs including Social Security and Medicare. These programs are in long-term fiscal trouble, given demographic trends. Yet the popularity of these benefits has long made proposals to revamp them a third rail.
Understandably, then, other influential Republicans have disqualified entitlements from consideration for cuts.
On Sunday, when asked to name “one thing you’re ready to put on the table as a spending cut that you think both parties can accept,” Rep. Nancy Mace (R-S.C.) instead stated things she wouldn’t put on the table. “Well, obviously no cuts to Medicare or Medicaid or Social Security,” she said. “That’s a nonstarter for either side.” Former president Donald Trump apparently agrees.
Of course, deficits could be narrowed by focusing on the other side of the ledger — that is, by increasing tax revenue. But Republicans have ruled that out, too.
Instead they’re proposing more tax cuts, which they have tacitly admitted might worsen deficits. Republicans are also working to gut tax enforcement, which would grind down federal revenue further.
So what options are left?
McCarthy, for his part, has proposed “eliminat[ing] all the money spent on ‘wokeism.’ ” (How big is the official “wokeism” line item? TBD.) But more broadly, once you reject any trims to entitlements or defense spending and bake in the cost of the GOP’s proposed tax cuts, you’re left with a roughly $20 trillion hole in budgets over the next decade.
Closing that gap would require eliminating nearly all other domestic spending, as the Tax Policy Center’s Howard Gleckman recently noted. That means axing border protection, air-traffic control, farm subsidies, infrastructure and many other categories that both voters and elected officials hold dear.
Republicans don’t seem so seem keen on cutting those things, either.
In short, virtually every possible avenue available for reducing the deficit would be unpopular. Which probably explains why supposedly fiscally conservative Republicans chose not to take them when they controlled both houses of Congress during Trump’s presidency.
The White House is expected to release a detailed budget by early March, building upon budgets it has released previously. Beyond a vague strategy document from last summer and the cacophony of contradictory comments from House leaders, Republicans still lack a formal counterproposal.
But even if McCarthy managed to whip something up: Who in their right mind would trust the rest of his caucus to stand by it?