Congressional Budget Office Director Phillip L. Swagel will brief House members Wednesday on the agency’s budget and economic outlook as lawmakers consider whether to adjust spending levels in conjunction with lifting the debt limit.
Speaker Kevin McCarthy and House Republicans have said they will not support a “clean” debt limit increase and are seeking to negotiate a cut in overall spending relative to the current fiscal year. Democrats have said they will not negotiate around the statutory borrowing limit, which must be raised to ensure the government can continue meeting its obligations on time.
Swagel’s scheduled briefing Wednesday follows smaller discussions he’s held with lawmakers since CBO released its 10-year budget and economic outlook on Feb. 15, including briefings last week for House Energy and Commerce Republicans and members of the Republican Study Committee.
The federal government will run out of cash to pay all its bills sometime between July and September unless the statutory debt limit is lifted, the CBO said last month.
The CBO reported projected deficits over the next decade will grow by $3.1 trillion, or 20 percent, from its forecast last May because of spending in a variety of new laws as well as higher inflation and interest rates. The fiscal 2023 deficit is now expected to come in at $1.41 trillion, or $426 billion higher than the agency’s forecast last year.
McCarthy cited growing interest costs — the CBO projects the government will spend $10.5 trillion on interest over the next decade — as a concern in an interview with CNBC Monday morning.
“This is what will break America,” he said. “Every great society collapses when they overextend themselves. And this is why it’s so critical.”
Swagel has been making the rounds as House and Senate Budget panel leaders weigh whether to renominate him for a second term.
In a blog post Monday, Swagel wrote that one way to address the consequences of rising debt would be to cut deficits by $5 trillion over the next decade, not counting interest payments. He said that would “stabilize” the growth of debt as a share of the U.S. economy, pointing to a list of 17 deficit reduction options the CBO has previously published, ranging from Medicaid spending caps to a tax on greenhouse gas emissions.
The Wednesday briefing with CBO also comes a day before President Joe Biden will release the main volume of his fiscal 2024 budget request, which McCarthy noted is a month late.
McCarthy argued the debt limit is an opportunity to enact “fiscal reform” and he’s tried to start negotiations with Biden and Democrats on that front. However, he said Biden “wasted a month” after he had an “initial discussion” with the president in February.
“Republicans and Democrats are sitting down this week together with no cameras and can talk about ideas,” McCarthy said, referring to the CBO briefing.
The speaker said in addition to eliminating “waste” in government spending, lawmakers could discuss other policy changes in areas like energy and border security.
Some Republicans are also talking about more stringent work requirements to benefit from safety-net programs like food stamps, now called the Supplemental Nutrition Assistance Program, and Temporary Assistance for Needy Families. Both programs are up for renewal and possible changes this year, with a new multiyear farm bill under discussion and TANF’s authorization set to lapse Sept. 30.
“Could we do something on work requirements?” McCarthy said. “There’s a lot of places that can make the economy grow at the same time.”
‘Can’t ignore the problem’
McCarthy reiterated that cuts to Social Security and Medicare are off the table in negotiations, even as he noted that the recent CBO outlook is the first one to project trust funds for those entitlements and the highway trust fund will become insolvent within the next decade.
“You can’t ignore the problem. But this is the challenge if you watch what the president’s doing. He’s out there saying something that’s a lie about Republicans — that we want to cut Social Security and Medicare,” McCarthy said. “We do not. We want to fix it.”
McCarthy said he’s open to bipartisan changes to those programs but cast doubt on the likelihood of such an overhaul given Democrats’ posturing. Biden’s “trying to make politics out of that, so I say that’s off the table,” he said.
Biden is planning remarks in Philadelphia in conjunction with unveiling his new budget on Thursday. The White House said Biden will discuss how his budget will “invest in America, continue to lower costs for families, protect and strengthen Social Security and Medicare, reduce the deficit, and more.”
In his State of the Union address, Biden talked about reducing the deficit by $2 trillion over a decade without cutting Social Security and Medicare, as well as prolonging the life of Medicare’s Hospital Insurance trust fund by two decades.
[Even Biden’s ‘unity’ agenda could be tough going]
In a video posted on the White House’s Twitter feed last week, Office of Management and Budget Director Shalanda Young said Biden’s budget would propose cutting the deficit “by ensuring that the wealthiest in this country and large corporations pay their fair share” of taxes.
Young said that’s in “stark contrast” to congressional Republicans who have “yet to put out a comprehensive plan” but have already expressed support for continuing tax cuts enacted under President Donald Trump and other tax benefits that could add $3 trillion to the debt.
McCarthy said Monday on CNBC that he told Biden during their February meeting that Republicans will not agree to raise taxes. “We’ve got more revenue coming in than at any time,” he said.
Paul M. Krawzak and David Lerman contributed to this report.
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