The House Freedom Caucus, a group of hard-right conservative and libertarian Republicans, wants a $4 trillion hike in the nation’s debt limit as part of the GOP’s big but still-developing tax and spending cut plans.
A hike in the debt limit would allow the government to continue borrowing to repay past debts and keep it from defaulting on the current $36 trillion-plus in outstanding debt. A default by the U.S. on its debt would trigger catastrophic economic consequences, economists say.
In a social media post early Thursday, the Freedom Caucus proposed the $4 trillion hike as part of a package of spending increases for increased border security and boosting the Pentagon’s budget. They said the boost would allow borrowing for another two years.
The group, which has long been a thorn in the side of House GOP leaders with its demands for more hard-line policies, said the hike would have to be accompanied by “dollar-for-dollar” spending cuts over 10 years.
“Our proposal is a Republican plan that can reach 218 votes, that would allow us to keep the ball on the Republican side of the field for defense and non-defense appropriations ― while delivering wins and uniting the conference,” the group said in its post.
The hike proposal, coming from a group of House Republicans that has prided itself over the years as being more hawkish on debt and deficits than the rest of the party, underscores the political dilemma facing the GOP: The party wants to cut spending and taxes but faces a skeptical bond market worried about how it will pay for its proposals.
At the same time, the 219 to 215 edge of Republicans to Democrats in the House means House Speaker Mike Johnson (R-La.) can afford to lose only one vote on whatever plan they come up with, a fact the Freedom Caucus hinted at by saying its plan could get 218 votes.
But including the debt limit in a bill to carry out the spending plans Republicans have would be politically risky. Doing so would mean they have to specify the size of the hike, instead of suspending the debt limit until a particular date, as has been the favored practice by Republicans for years.
Putting the limit in the same bill would also signal they intend to move it forward with only Republican votes. The likely problem with that is congressional Republicans have not approved a debt ceiling increase or suspension with only GOP votes since 2005, when George W. Bush was president.
The Freedom Caucus proposal also splits with the current House GOP leadership stance by seeking two separate bills be passed with only Republican votes in a process called reconciliation instead of one. The Senate GOP has favored a two-step strategy as well.
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In addition to the $4 trillion debt limit hike, the Freedom Caucus said the first package should include about $100 billion more for border security and $100 to $200 billion more for defense spending. It listed as possible offsetting spending cuts reversing President Joe Biden’s student loan forgiveness initiatives, rolling back plans to boost electric vehicle sales and adding additional work requirements for people who get food assistance from the government.
The group said its plan had several advantages including “Speed to deliver huge early wins on key priorities for President Trump,” reducing Democratic leverage in ongoing annual spending talks and leaving room to pass a second GOP-votes-only package that would include tax cuts.
Treasury Secretary Janet Yellen said in December that the Treasury would have to start making accounting moves to keep under the current debt limit. Projections for how long that would work range from June to later in the summer.