What’s in the GOP Bill to Raise the Debt Limit, Cut Spending

WASHINGTON (AP) — House Republicans are trying to extract a price from Democrats for agreeing to increase the nation’s borrowing power. and prevent government from defaulting on obligations It has accumulated over decades. They are advocating for their priorities and getting behind President Joe Biden in a separate bill that passed the chamber on Wednesday.

The legislation in question is unlikely to become law in practice. But Republicans hope the bill’s passage will force Biden to the negotiating table, where they could seek concessions in exchange for boosting the nation’s borrowing power and ensuring the U.S. Treasury pays its bills in full.

“He has to negotiate now or we’re the only ones who have raised the debt ceiling,” McCarthy said after the vote.

Here’s a look at the key features of the legislation the House approved by a vote of 217-215.

Central Govt Expenditure Limit

The bill would cap $1.47 trillion in federal discretionary spending next fiscal year. And, in most years, it will only allow for an increase of 1% annually, well below the rate of inflation.

The spending cap is the big-ticket item in the bill, accounting for two-thirds of the $4.8 trillion in deficit reduction that the Congressional Budget Office says would occur over 10 years if the bill is enacted.

Discretionary spending includes weapons programs, service member pay, subsidies to schools that serve large shares of low-income students, rental housing for millions of poor and disabled people, and money to fund research into cancer and other life-threatening diseases. This is spending that Congress authorizes through appropriations bills.

The House GOP bill would not affect spending on Social Security and Medicare. Such spending, referred to as mandatory, accounts for about two-thirds of total federal spending.

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Claw Bag Covid Money

The bill would repeal all unconditional COVID relief money from six bills enacted from 2020-2022. The changes would reduce spending by about $30 billion over the next decade, according to the CBO. This is less than 1% of the total cost of the six bills.

IRS target

House Republicans passed a bill that would rescind nearly $71 billion, giving Congress the IRS to upgrade its technology and increase staffing, with House Republicans passing their terms. They included the same proposal in their debt ceiling bill.

Democrats also approved more IRS funding than Congress normally provides each year through the appropriations process. The incentive immediately became a magnet for GOP campaign ads, claiming it would lead to an army of IRS agents harassing Americans.

Repealing the IRS money would increase the deficit by about $120 billion over the coming decade because of the impact on the agency’s work, the CBO said. But McCarthy said the move is needed to “protect families and businesses from a weaponized IRS.”

Block Student Loan Relief

The Republican bill would repeal President Biden’s measures to provide $10,000 to $20,000 in debt relief for nearly all borrowers who took out student loans. The bill would also block the administration’s attempts to halve monthly payments for undergraduate loans. CBO projects that the student loan changes favored by House Republicans would save about $460 billion over 10 years.

Republicans argue that Biden is unfairly shifting the responsibilities of paying off student loan debts onto millions of American taxpayers who have not gone to college or who have already paid off student loans. This policy does nothing to curb rising tuition fees at colleges and universities.

Student loan forgiveness would give millions of younger Americans a little financial breathing room, Biden said. This will improve their ability to plow their resources into a house, car or basic essentials, helping to strengthen the economy. Almost 90% of loan cancellations go to borrowers earning less than $75,000.

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Going after renewables

Republicans are seeking to repeal most of the tax cuts that Democrats passed on party-line votes last year.

McCarthy argues that tax breaks “distort the market and waste taxpayers’ money.” The White House says the tax breaks will generate hundreds of billions of dollars in private sector investment and create thousands of manufacturing jobs in America.

Republicans have abandoned efforts to eliminate some biofuel tax credits, however, after threats to block the bill were proposed changes. A top priority for Republicans is recovering those credits from Iowa and other Midwestern states, where the production of alternative fuels like ethanol plays a key role in the rural economy.

Citing estimates from the Joint Committee on Taxation, CBO estimates that repealing the clean energy tax credits would save about $570 billion over 10 years.

Job requirements

One of the key components of the GOP bill is expanded work requirements for federal cash assistance and food assistance recipients.

Under current law, adults under 50 and without dependents can lose their food stamp or SNAP benefits if they do not spend 20 hours per week in work-related activities. This bill applies to people aged 50-55 years.

In addition, the bill would apply work requirements to able-bodied adults without dependents on Medicaid, the federal-state program that provides health insurance coverage to low-income Americans. Job training and performing community service count towards meeting the job requirement.

McCarthy said the changes will help victims learn new job skills and earn wages while helping fill some of the millions of job openings across the country. The White House said millions of people, many already working, would lose their health insurance.

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A Congressional Budget Office review last year of work requirements for Medicaid recipients found that Arkansas was the only state to impose a work requirement for more than a few months. Many of the targeted adults have lost their health insurance and employment does not appear to be increasing. Although the evidence is scant, research has indicated that many are unaware of the work requirement or find it too difficult to demonstrate compliance.

CBO estimates that about 15 million people could be subject to new Medicaid requirements each year, although many more would qualify for exemptions. About 1.5 million people, on average, would lose federal funding for their Medicare, and about 600,000 of that group would become uninsured.

Fossil fuel boost

The debt ceiling package includes legislation the House passed earlier this year to boost domestic production of oil, natural gas and coal and ease permitting restrictions that have delayed pipelines, refineries and other projects.

Known as HR 1 to signal its importance to House Republicans, the energy bill also seeks to boost production of key minerals such as lithium, nickel and cobalt, which are used in electric vehicles, computers, cellphones and other products. Biden described the House GOP’s legislation as a “thinly veiled license to pollute.”

Increase your credit limit

Republicans will freeze the debt ceiling until March 31 or up to $1.5 trillion, whichever comes first. That would set up another debt ceiling fight early next year, months before the November election, when control of the White House and Congress will be decided.

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