The federal budget operates on the same principle. But your cash flow leaves you no alternative. To employ these tricks is economically unwise because you end up spending more money. Or you pay only the minimum on your credit card and leave the remainder for next month, or the month after that. That incurs a small penalty you’ll have to pay on your next bill. You can’t afford to pay all your bills this month, so you look them over and decide which to defer. You’ve probably got some experience taking extraordinary measures in your own financial life. In 2011, when the GOP played a similar game, it managed to lower Standard & Poor’s credit rating for U.S. But only Republicans resort to full-on extortion that puts the country at serious risk of default. Republicans like to point out that congressional Democrats have used the debt limit to extract concessions from Republican presidents. The only reason the United States didn’t go into default then was that the Treasury used the same “ extraordinary measures ” (i.e., accounting gimmicks) that it deployed during similarly dangerous debt limit games of chicken that congressional Republicans chose to play in 20. The statutory debt ceiling of $31.4 trillion was actually reached way back on January 19. We do not “owe it to our children” to charge oil companies less for leases on federal land or to enable tax cheating by the rich.Įven setting aside McCarthy’s debt ceiling bill, don’t kid yourself that Republican intransigence on the debt ceiling is cost-free. That renders glaringly hypocritical individual examples where they propose spending increases. But congressional Republicans say they’re fighting Biden on the debt ceiling (“We owe it to our children”) because they want to halt runaway spending. If the debt ceiling bill’s pledge to cut discretionary spending next year by 27 or 33 percent is a bluff, isn’t that same bill’s pledge to bloat the deficit by $115.4 billion also a bluff? Sure, OK. You may protest that the previous two calculations are speculation. That sounds like a spending cut, but rescinding that increase would cost the federal government $186 billion in lost tax revenue over the next decade, according to CBO, netting out to a cost of $115 billion. The debt limit bill would also claw back $71 billion of the $80 billion Congress included in last year’s climate bill to boost funding for the IRS. But as the Center on Budget and Policy Priorities pointed out, if McCarthy intends not to cut funding for the Veterans Administration, then discretionary spending on all other domestic programs next year will have to be cut not 27 percent but 33 percent. McCarthy blows a gasket every time President Joe Biden points out that his plan would require a severe reduction in veterans’ benefits. That’s assuming, as everyone does, that congressional Republicans will never apply these across-the-board spending cuts to the Pentagon. Doing that would necessitate, next year, a 27 percent cut in discretionary spending, according to the Center on Budget and Policy Priorities. Granted, it is true that the bill would, according to the Congressional Budget Office, or CBO, reduce projected deficits by $4.8 trillion over 10 years. “Before we borrow another dime,” House Speaker Kevin McCarthy said last month, “we owe it to our children to save money everywhere.” But McCarthy’s claim that all his party wants to do is bring down government spending isn’t entirely true. Congressional Republicans say they’re resisting an increase to the debt ceiling because government spending is out of control.
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