House Republicans threaten debt ceiling fight for spending cuts

If Republicans take control of the House of Representatives in next month’s midterm elections, they will refuse to raise the debt ceiling unless Democrats agree to spending cuts to domestic programs, possibly including Social Security and Medicare, according to recent interviews with House GOP leaders.

House Minority Leader Kevin McCarthy told Punchbowl News in an interview published Tuesday morning that he would use the need to raise the debt ceiling at some point in 2023 to negotiate policy changes with the White House.

“We should seriously sit together and [figure out] where can we eliminate some waste,” McCarthy said of the future discussions. When asked if that might include entitlement programs like Medicare and Social Security, McCarthy didn’t rule it out, saying he wouldn’t “predetermine” anything.

McCarthy also told Punchbowl he was opposed to any further funding for the pandemic and would severely restrict, if not eliminate, supporting Ukraine in its war against Russia, saying, “I think people are gonna be sitting in a recession and they’re not going to write a blank check to Ukraine.”

If the debt ceiling is not raised or suspended, it could cause the government to default on its debt and to fail to make payments to recipients such as Social Security beneficiaries. Those events would crash financial markets and almost certainly trigger a recession. During a debate over raising the debt ceiling last year, Moody’s Analytics estimated that the damage could be up to 6 million jobs lost and a stock market decline that could eliminate $15 trillion of household wealth.

Republicans have a strong chance of winning a majority of seats in the House next month, in which case McCarthy would be in line to be speaker of the House. His comments on seeking spending cuts and using the debt ceiling as a weapon are consistent with those of other GOP members who are positioning themselves for powerful positions within the next Congress.

“The debt limit is clearly one of those tools that Republicans — that a Republican-controlled Congress — will use to make sure that we do everything we can to make this economy strong,” Rep. Jason Smith, R-Mo., told Bloomberg Government earlier this month. Smith is the ranking member of the House Budget Committee and wants to be chairman of the House Ways and Means Committee, which controls taxation.

Three members who would potentially take over as House Budget chair told Bloomberg that they’re considering changes to Social Security, Medicare and other social welfare programs in order to reduce their costs, including potentially raising the eligibility age.

“Our main focus has got to be on nondiscretionary — it’s got to be on entitlements,” said Rep. Buddy Carter, R-Ga.

Smith said the focus could be on “welfare reform, making sure that work requirements are put in place for able-bodied healthy adults. We need to make sure income verification are in place for welfare programs.” Rep. Jodey Arrington, R-Texas, said work requirements for food stamps should be written into law as well.

Rep. Lloyd Smucker, R-Pa., said Republicans could consider means testing, cutting off retirement and health care benefits to Americans over a certain income. Smucker acknowledged that touching the popular programs could prove politically dangerous, but Bloomberg wrote that he said “high inflation after record deficits may give conservatives the political willpower to seek ambitious cuts needed to curtail government spending.”

Republicans only engage in debt ceiling brinkmanship when Democrats are in the White House. The debt limit was quietly raised three times during Donald Trump’s term, even though the national debt increased $7.8 trillion during his tenure. Last year, Republicans used the filibuster to block a debt ceiling increase for months, before lifting the blockade and voting almost unanimously against the increase. In 2011, with a Republican-controlled House, a Democratic Senate and Barack Obama as president, Republicans refused to raise the debt limit for months, resulting in the country’s credit rating being downgraded for the first time.

Although they haven’t publicly tied these proposals to the debt ceiling, Republican Senate candidates have also talked about major changes to federal retirement programs, including potentially privatizing Social Security. In August, Sen. Ron Johnson, R-Wis., lamented that the programs’ spending is on autopilot and called for Congress to allocate spending for them each year, making it easier to make cuts to the programs. Earlier this year, National Republican Senatorial Committee Chair Rick Scott, R-Fla., proposed that all federal laws — including Medicare and Social Security — “sunset” after five years.

Congressional Republicans also want to reduce the size of government on the revenue side. On Monday, the Washington Post reported that one of the top focuses of a potential Republican Congress would be to make permanent many of the tax cuts passed by Trump and the GOP-controlled Congress in 2017. Those cuts mainly benefited the wealthiest Americans and corporations.

In a statement, Rep. Smith praised the Trump tax cuts, saying, “We need to build on that success by making permanent those policies that are supporting families and workers while looking at what more needs to be done to the tax code.”

“It’ll be a battle royale in Washington over the next year over which of Trump’s tax cuts get extended,” Stephen Moore, an economic adviser to Trump and many leading congressional Republicans, told the Post. “This will be a central, driving theme of the Republican Congress — making those tax cuts permanent.”