‘Traitor’ Kevin McCarthy Goes To Wall Street To Sell A Non-Existent GQP Plan On Debt Ceiling And Budget

“Traitor” Kevin McCarthy has been trying to get President Biden to negotiate against himself, but Biden has been having none of it since January. Biden’s message to McCarthy ahead of critical White House meeting: Show me your plan: ‘Biden, asked by CNN what his message to McCarthy would be in that meeting, said it would be “show me your budget and I’ll show you mine.’”

Republicans have had months now to come up with a budget proposal, but a divided GQP caucus cannot even agree among themselves.

The GOP has no idea what it wants to do on the budget, but it's definitely not *that* https://t.co/jVcedZ3xrc

— Catherine Rampell (@crampell) April 4, 2023

The GOP has no idea what it wants on the budget, but it’s definitely not that:

How do you negotiate with someone who has no idea what they want?

That’s the challenge for President Biden as Republicans say he must (A) satisfy their fiscal demands before they’ll raise the debt limit; even though they (B) can’t decide what those demands actually are; and they (C) have zero credibility for delivering 218 House votes for whatever those demands eventually turn out to be.

Republicans were fine with the last president signing $4.7 trillion in new deficits into law even before covid-19 hit (plus, trillions more thereafter). Now that a Democrat is president, though, the GOP’s born-again deficit hawks decided that Something Must Be Done about the nation’s fiscal health.

It’s not clear what Something is, however, beyond taking a valuable hostage: the nation’s debt ceiling.

That’s the statutory limit on how much the government can borrow to pay off bills that previous Congresses already agreed to. Not raising the debt ceiling would force the federal government to renege on some of those commitments, possibly missing payments on obligations such as interest payments, Social Security benefits and military salaries. The other potential consequences of an even accidental default include, in the near term, a global financial crisis; and, in the longer term, higher borrowing costs, because the United States would no longer look like the safe, reliable borrower it has always been.

Higher borrowing costs mean bigger deficits going forward, of course. If Republicans have recently found religion on fiscal responsibility, they seem to still be sorting out the exact theological tenets.

The rest of the GOP plan for reducing deficits is still TBD. Republicans say they want less debt. Unfortunately, they have ruled out virtually every mathematical means for achieving that outcome.

To wit: They won’t raise taxes (to the contrary, they have pledged to cut taxes further); they won’t touch Social Security or Medicare; they won’t slash defense or veterans’ programs; and they won’t zero out the rest of the nondefense discretionary budget, as would be required if they chose to extend all the Trump tax cuts and took all those other spending categories off the table, according to the nonpartisan Congressional Budget Office.

Not to worry: At least Republicans still pledge to cut “wokeism” from the budget! (This apparently means defunding the FBI.)

Biden, for his part, has at least committed fiscal proposals to paper… Republicans, on the other hand, appear to have abandoned any pretense of a counteroffer. They have no budget, nor even the basic outlines of one.

In a letter in late March, House Speaker Kevin McCarthy (R-Calif.) accused the president of being “missing in action” on debt negotiations. [He did so again today.] Never mind, apparently, McCarthy’s lack of concrete positions of his own, beyond platitudes about “reducing excessive non-defense government spending” (which ones are excessive?) and advocating “policies to grow our economy and keep Americans safe, including measures to lower energy costs.” (Okay, how?)

[R]aising the debt ceiling is about making good on past obligations; budget proposals are about future spending and tax decisions. These things should not be linked. Congress should pass a clean debt limit increase or suspension without preconditions, just as Republicans repeatedly agreed to do when Donald Trump was president. Since then, however, Republicans have tried to bundle the two unrelated things, treating one as a useful hostage to force (again, TBD) changes to the other.

Last week, House Budget Committee Chair Jodey Arrington (R-Tex.) let slip the real reason there is neither a detailed GOP fiscal plan nor a concrete set of principles for one. Convincing 218 lawmakers (that is, a House majority) to commit to a budget is not “as easy as when I was a freshman here,” he said.

Note: The New York Times reported last week:

Mr. McCarthy has told colleagues he has no confidence in Mr. Arrington, the man responsible for delivering a budget framework laying out the spending cuts that Republicans have said they will demand in exchange for any move to increase the debt limit. Aside from the perceived disloyalty, Mr. McCarthy regards Mr. Arrington, a former official in the George W. Bush administration, as incompetent, according to more than half a dozen people familiar with his thinking, who spoke on the condition of anonymity to describe private conversations.

The Times’ report added that the House speaker has also told colleagues and allies that he cannot rely on House Majority Leader Steve Scalise, describing the Louisianan as “ineffective, checked out and reluctant to take a position on anything.”

So “Traitor” Kevin McCarthy is blaming everyone and anyone for his own failures as a leader, he is ineffective and incompetent.

In other words: The GOP caucus is a cacophonous mess. Republicans don’t know what they want; they only know they don’t want the thing Democrats are offering. Which is reminiscent of the dynamics of many other major policy debates in recent years.

And yet Republicans keep demanding that Biden sit down, negotiate and make concessions. Each time they do, the rest of us should respond: Concessions on what?

Today, “Traitor” Kevin McCarthy went to Wall Street to sell his non-existent GQP plan and to continue to gaslight accusing the president of being “missing in action” on debt negotiations (psychological projection is what the GQP does best).

The Washington Post reports, Fiscal crisis nears as McCarthy takes debt ceiling plan to Wall Street:

House Speaker Kevin McCarthy proclaimed Monday that Republicans would not allow the government to default on its debts, even as he labored to sell Wall Street on a risky fiscal showdown with the White House that could unleash vast economic turmoil.

Speaking at the New York Stock Exchange, McCarthy (R-Calif.) affirmed his party’s plan to seize on a rapidly approaching deadline — an urgent need to raise the debt ceiling, which sets how much Washington can borrow to pay its bills — to extract spending cuts and other policy concessions from President Biden.

“Debt limit negotiations are an opportunity to examine our nation’s finances,” McCarthy said, later adding: “Defaulting on our debt is not an option, but neither is a future of higher taxes, higher interest rates, more dependency on China and an economy that doesn’t work for working Americans.”

But McCarthy’s speech belied the risks in the GOP’s political gambit, which threatens to sink the stock market, thrust millions of Americans from their jobs and jolt the global financial system. The stakes seemed only more glaring given McCarthy’s choice to deliver his remarks in the beating heart of Wall Street, where markets tumbled dramatically when Republicans in 2011 last tried to use the debt ceiling as political leverage.

On Monday, investors seemed largely unfazed, though major stock indexes were all down slightly around midday.

McCarthy, meanwhile, called on Wall Street traders to apply new political pressure on the White House.
“If you agree, don’t sit back — join us. Join us in demanding a reasonable negotiation, a responsible debt ceiling, an agreement that brings spending under control,” McCarthy said.

The White House has refused to shift its position out of a belief that the country’s credit is not negotiable — and Republicans themselves have splintered at times over how to approach the fight. The GOP has yet to release a budget, and House Republican leaders say they’re still weeks away from finalizing legislation detailing their specific demands in debt negotiations.

As President Biden continues to fight against inflation, MAGA Republicans in Congress are trying to take our economy hostage unless we gut programs that lower costs for hard-working Americans.

— The White House (@WhiteHouse) April 17, 2023

The standoff has raised the stakes for McCarthy, since the consequences of inaction — the first-ever government default — could devastate an economy already teetering on the precipice of recession.

“It will be financial chaos,” predicted Mark Zandi, the chief economist at Moody’s Analytics, when asked about a potential brush with default. “Our fiscal problems will be meaningfully worse. … Our geopolitical standing in the world will be undermined.”

At issue is the U.S. government’s credit: Washington must borrow money to pay for expenses that both parties have incurred, but it can only do so up to the maximum allowed by federal law. Lawmakers periodically must suspend or raise that threshold or the government cannot cover its costs, possibly including interest payments on bonds, triggering a default.

It is a constitutional requirement that the government must maintain the full faith and credit of the United States. This is non-negotiable.

The United States technically reached the debt limit — now set at roughly $31 trillion — earlier this year. That prompted the Biden administration to begin taking special budgetary measures in January so it could continue borrowing. But those moves are temporary solutions meant to buy extra time on Capitol Hill, where lawmakers may have as little as seven weeks to act.

A failure to do so could prove catastrophic, according to the Biden administration, which has called on Republicans in increasingly urgent terms to raise the cap without conditions. Yet House Republicans refuse to lift the limit unless they first can achieve a vast set of demands opposed by the White House. GOP leaders aim to slash federal spending, cap agencies’ future budgets, claw back unspent coronavirus aid, undo Biden’s student loan cancellation plan and adopt a slew of other policies, including new rules that force Medicaid recipients to work longer hours in exchange for health insurance. Only then, House Republicans say, are they willing to raise the debt ceiling to cover spending for the next year.

House Republicans have been coalescing around the idea of trying to make President Joe Biden accept stricter “work requirements” for federal programs that help people pay for groceries and health care. Republicans Link Debt Ceiling To Food Benefit Cuts (excerpt):

House Speaker Kevin McCarthy (R-Calif.) highlighted the idea during a speech at the New York Stock Exchange on Monday.

McCarthy said a forthcoming Republican spending plan will “restore work requirements that ensure able-bodied adults without dependents earn a paycheck and learn new skills.”

McCarthy’s remarks followed recommendations from both moderate and hard-right factions within the House Republican conference for McCarthy to demand work requirements as part of a debt ceiling standoff with Biden.

McCarthy has said Republicans won’t approve a “debt limit” change unless Biden agrees to spending cuts, but Republicans have been slow to offer specifics. McCarthy did not identify which federal programs need stricter rules, but in recent weeks House Republicans have pointed to Medicaid and the Supplemental Nutrition Assistance Program.

[E]very month more than 22 million households receive federal nutrition assistance benefits, which can be redeemed for food products at grocery stores. Most SNAP households have members who are young, old or disabled, but roughly 13% include able-bodied adults without dependents ― the population Republicans are targeting.

For most of its history, Medicaid hasn’t had work requirements, and attempts to impose them during the Donald Trump administration met resistance from federal courts.

On the other hand, federal food assistance already has work requirements for able-bodied adults, but states have been able to waive the rules during the pandemic and whenever local unemployment is higher than average.

* * *

“Today House Republicans have made their priorities crystal clear: keep Wall Street happy and take away health care and food assistance from working Americans,” Sen. Ron Wyden (D-Ore.) said in a statement. “The only thing that so-called work requirements accomplish is burying people with paperwork in order to deny them necessities like food and healthcare.”

[T]he problem for McCarthy is that even if he can corral unanimous support from House Republicans for a debt ceiling bill that cuts spending and beefs up work requirements, such a measure would likely lack enough support to make it through the Democratic-controlled Senate. The budget standoff will become a stalemate.

The Post continues:

In response, the White House on Monday blasted the GOP for failing to release the full details of its plan. Andrew Bates, a spokesman for the White House, said in a statement that McCarthy “failed to clearly outline what House Republicans are proposing and will vote on,” adding that the Republican “wish-list” would increase costs for hard-working families, take food assistance and health care away from millions of Americans, and yet would enlarge the deficit.”

Biden has expressed an openness to meeting with McCarthy to discuss broader fiscal issues. Still, the two men have not spoken at length since their initial chat in February, as the president argues the GOP first should issue a budget — and Republicans, who have failed to finalize such a spending blueprint, maintain the issues are separate.

Speaking to a room of traders, McCarthy on Monday aimed to assuage skittish investors, rally his party and burnish his own political legacy. Defying the White House, he pledged: “A no-strings-attached debt limit increase will not pass.”

* * *

“He’s probably trying to reassure investors and Wall Street … that Congress is capable of doing something, and we’re going to do something,” said Rep. Steve Womack (R-Ark.), a top appropriator, who said the slew of unresolved issues in the debate serve as a “test” for McCarthy.

But Womack and other Republicans acknowledged that the “real question” is if their own party can shore up the 218 votes needed in the House to pass a bill. With tensions simmering among the GOP’s far-right and moderate ranks — and only four votes to spare in a narrow majority — Republicans said they need to show progress if they hope to put new pressure on Democrats.

* * *

Some economists see a further hit to growth if Congress adopts the still-emerging GOP plan, which aims to slash federal spending on health, education, science and labor programs by about $130 billion. Zandi predicted that real gross domestic product could fall by about 0.6 percent and reduce employment by 720,000 jobs in the fourth quarter of 2024.

If the economy does enter a recession, Republicans’ proposed cuts to federal spending could make the downturn “much deeper, prolonged and much more difficult for the economy to ultimately recover,” he added. And Zandi — along with other economists — said a default could create other shock waves globally three years after the coronavirus pandemic hammered economies around the world.

But Republicans have forged ahead anyway on a belief that they must act swiftly to address the national debt, which is expected to reach roughly $50 trillion by 2033, according to projections released earlier this year from the nonpartisan Congressional Budget Office.

Both parties have added considerably to that imbalance, including recent social spending packages under Biden and tax cuts adopted by Republicans in 2017. Even as the deficit blossomed, GOP lawmakers previously supported efforts to raise the debt ceiling under President Donald Trump — sparking cries of hypocrisy from Democrats, who did not withhold their votes then.

* * *

But even the renewed sense of fiscal brinkmanship threatens to create costly economic turbulence in the months to come.

In 2011, a similarly resurgent GOP squared off against another Democrat, President Barack Obama, as conservative tea party lawmakers demanded equally steep spending cuts. The two sides ultimately avoided default after brokering a sweeping deal that slashed government programs and capped federal agencies’ spending for the next 10 years, dismaying Democrats, who say the cuts harmed average Americans.

Yet the mere prospect of a fiscal doomsday still carried dire consequences, precipitating a downgrade in U.S. credit that cost taxpayers $1.3 billion in 2011 by driving up interest rates on government bonds, according to a report issued a year later by the Government Accountability Office.

Over that summer, the Dow Jones industrial average also sank by about 2,000 points. It plummeted sharply on Aug. 8, 2011 — the first day of trading after Standard & Poor’s downgraded U.S. sovereign debt — by more than 630 points. At the time, the 5.6 percent tumble marked the sixth-largest drop in index history, and it proved then to be the worst day of trading since the 2008 financial crisis, spooking policymakers and investors alike.

More than a decade later, some Republicans in Washington acknowledged that it may well take a more severe economic disruption just to force a resolution to the country’s fiscal standoff.

So “conservatives” will take Americans hostage and threaten to kill the hostage if the rest of us do not agree to their extortion demands. They are domestic terrorists willing to blow up the U.S. and world economies, and to plunge the global economy into chaos.

“Traitor” Kevin McCarthy is an assclown, he always has been an assclown. and he has no capability to thread the needle on this with his extremist MAGA Fascist caucus. I give him only a 50-50 chance of keeping his job before the August recess.

The MAGA Fascists are going to default on the debt, and blow up the economy because chaos is what they want.  It would only take six Republicans willing to break from their caucus and to honor their constitutional duty to maintain the full faith and credit of the United States to pass a clean debt ceiling increase – repealing this stupid law would be more preferable to put an end to the GQP hostage taking over the debt limit – but are there six patriotic Republicans willing to honor their constitutional duty to maintain the full faith and credit of the United States and put country ahead of party? I cannot name six Republicans.

We are barreling towards disaster because too many Americans voted for Republicans last November.

UPDATE: “I’ll be blunt. If Speaker McCarthy continues in this direction, we are headed toward a default.” — Senate Majority Leader Chuck Schumer (D-NY), quoted by Punchbowl News, on the latest proposal by Speaker Kevin McCarthy to raise the debt ceiling.