As the clock ticks toward a possible default on the national debt, Speaker of the House Kevin McCarthy (R–Calif.) and top Democrats in Washington—as well as media allies on both sides—are locked in a staring contest over who can take the matter less seriously.
The latest development in this slow-motion train wreck was a speech McCarthy delivered Monday from the New York Stock Exchange. "Debt limit negotiations are an opportunity to examine our nation's finances," he said, stressing that a bill to raise the nation's debt limit would only get through the House if it was pared with spending cuts. The House will vote on such a bill within "the coming weeks," McCarthy promised.
So far, so good. A debt default would be an economic catastrophe for the country and should be averted at all costs—but McCarthy is right that this is a good opportunity to examine America's out-of-control borrowing habit. Raising the debt ceiling doesn't authorize more borrowing. It merely gives the Treasury permission to borrow funds to pay for what Congress has previously agreed to spend. But it is the moment when past congressional budgeting decisions come home to roost—the equivalent of seeing your credit card statement after a blowout vacation that you couldn't afford. You still have to pay the bills, but it should be a wake-up call.
But while McCarthy is saying some of the right things about this situation, he still doesn't seem to have much of a plan for what to do. Monday's speech was devoid of specifics beyond a promise to cut spending back to last year's levels—something he's been proposing since January, just weeks after the passage of a year-end omnibus bill that hiked spending across the board—and some rather vague promises about tightening work requirements for welfare programs.
Notably absent from Monday's speech was any promise about balancing the budget in 10 years, something that had been part of the House GOP's earlier list of demands for the debt ceiling negotiations. As Reason has previously noted, it's pretty much impossible to make the budget balance in a decade without making serious alternations to entitlement programs including Social Security and Medicare, and McCarthy has promised not to touch those as part of the debt ceiling package.
Importantly, it remains unclear whether even this narrower list of prospective ideas can pass the GOP-controlled House. Asked in an interview on CNBC just moments after his New York speech ended, McCarthy refused to give a straight answer about whether he had enough votes for this still-murky debt ceiling package.
As Democrats were quick to point out, McCarthy's "plan" is little more than a series of starting points for negotiations. "What we got today was not a plan," Senate Majority Leader Chuck Schumer (D–N.Y.) told NBC News after McCarthy's speech. "It was a recycled pile of the same things he's been saying for months."
But, well, Democrats are just recycling the same things they've been saying for months too. The White House has been steadfast in refusing to negotiate with House Republicans until McCarthy presents a full-fledged budget proposal like the one President Joe Biden presented on March 9. "I don't know what we're negotiating if I don't know what they want, what they're going to do," Biden reiterated to reporters over the weekend.
This is an unserious approach too. Both McCarthy and Biden (and everyone else involved) are well aware of why Democrats want to see a full Republican budget plan before they start negotiating—and it has very little to do with the debt ceiling. Instead, Democrats will pick apart the proposal to score political points by criticizing whatever spending cuts the House GOP outlines.
Indeed, Democrats and their allies are already eager to demagogue the bare bones of what McCarthy has outlined. Liberal Substacker Matt Yglesias says it is "irresponsible for Kevin McCarthy to run around threatening to blow up the global economy in order to snatch poor people's health care away." At Talking Points Memo, David Kurtz is already decrying the "draconian spending cuts" that McCarthy has proposed. That's insane, because McCarthy's so-called plan merely calls for rolling back federal spending to the level it was at in 2022—a whole four months ago.
Here's the really crazy thing: Even if Congress did somehow manage to hold the discretionary spending level next year, overall spending would still increase. That's because the $1.7 trillion discretionary budget is only a fraction of federal spending. Other items—like the so-called mandatory spending on entitlements like Social Security and Medicare as well as the rapidly increasing interest costs connected to the $31 trillion national debt—will continue to grow and drive federal deficits higher.
The crux of this problem is two-fold. First, Republicans have spent the better part of the past decade completely ignoring fiscal policy—while in many cases actively chasing out members who did care about this stuff. As a result, the GOP has very little institutional sense of what a solidly conservative federal budget would actually look like. Is there any spending plan that would get the support of all 222 Republican members right now? McCarthy doesn't seem to know.
Second, Democrats have demonstrated an utter unwillingness to acknowledge that America has a serious borrowing problem, which must be the starting point for any negotiation about the debt ceiling regardless of what other policies may or may not end up being part of the final package. They don't need to see a full budget proposal to acknowledge things like the Congressional Budget Office's forecast that says the federal government is on track to spend $10.5 trillion on interest payments in the next decade—and more if interest rates remain higher than expected.
Why should Republicans put forth a budget plan when they know in advance that Democrats only want to use it to paint the GOP as a party of benefit-cutting skinflints? Why should Democrats negotiate in good faith when they know quite well that Republicans only care about fiscal responsibility when a Dem is in the White House? Neither side has much to gain from doing what the other wants, so no one moves.
But the impasse created by years of poor, myopic decision making in Washington is pushing the federal government ever closer to a dangerous cliff. McCarthy and Biden need to get serious about this, and soon.
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