Senate Republicans vote to hold the economy hostage

The Senate Republican caucus voted on Wednesday to oppose allowing the Treasury Department to borrow the money required to pay off the interest on the national debt without massive spending cuts.

Instead, in a proposal, pushed by Sen. Rick Scott of Florida, chair of the National Republican Senatorial Committee, they insist that any vote to increase the debt limit be offset by dollar-for-dollar reductions to federal spending or other “meaningful structural reform.”

“I think Republicans agree that we have too much debt and that we have to figure out how to live within our means,” Scott told NBC News. “The American public is scared to death of all this debt and what’s happening with inflation.”

While some Senate Republicans were quick to note that the vote did not create a binding policy, it signals that the minority party hopes to again hold the economy hostage to their demands.

The debt limit is a statutory cap on the amount of money the government can borrow to pay its obligations. Because the government spends more than it takes in and also has to pay interest on its existing $28 trillion-plus debt, failure to raise it would cause an unprecedented default.

When he was treasury secretary under Donald Trump, Steve Mnuchin asked Congress to raise the debt limit in 2017 with no strings attached, saying such a move was vital to “have robust economic growth and to promote fiscal discipline.” He noted, “Over the past two decades, members of Congress and presidents from both parties have raised the debt ceiling 15 times, and we look forward to working with Congress to ensure the full faith and credit of the United States government.”

But during the Obama administration, congressional Republicans frequently refused to pass “clean” debt-limit increases, instead demanding that Democrats agree to slash federal programs.

In 2011, the House Republican majority brought the nation to the brink of default, demanding broad cuts. The crisis they forced nearly caused a global economic meltdown, led to a downgrade in the country’s credit rating, and increased borrowing costs by $1.3 billion for that year alone.

Once Donald Trump took office in 2017, congressional Republicans’ opposition to raising the debt limit waned significantly. In 2019, most of the Senate GOP voted for a law that suspended the debt limit entirely for fiscal years 2020 and 2021. The national debt increased by about 40% over Trump’s time in office, including a significant increase before the COVID-19 pandemic.

Now that a Democrat is back in the White House, Republicans are once again expressing concern about the debt — without any willingness to rethink the tax cuts they passed for the rich and big corporations. And Wednesday’s vote indicates that they are again planning to hurt the economy to force the issue of cuts to key programs.

With narrow Democratic majorities in the House and Senate, Congress might be able to raise the debt limit without the GOP’s support. As a budgetary matter, it could be increased — but not suspended — by a simple majority vote under reconciliation rules, the Washington Post reported on Thursday.

Sen. Ron Wyden (D-OR), who chairs the Senate Committee on Finance, told the paper that he will not allow another fight like in 2011. “This is a page from the Obama-era economic sabotage playbook, and I’m not going to let Republicans play games with the economy for their political benefit,” he vowed.

Published with permission of The American Independent Foundation.