US House Representative Speaker Kevin McCarthy on Monday announced that his fellow Republicans would vote for an increase in the government’s $31.4 trillion debt ceiling along with some quantitative tightening and minor tweaks in policies. These would ensure the absence of a tragic non-payment crisis.
McCarthy, while speaking at the New York Stock Exchange (NYSE), said that his proposal would help the taxpayers save hundreds of billions of dollars, reduce their dependence on their arch-trade rival China and also ease some of the inflation. He pointed out that his plans could be executed without hampering Social Security and Medicare.
The Republicans have previously proposed some ideas and policy changes aligned with President Joe Biden’s will. McCarthy has taken some bold steps and proposed changes that oppose the president’s will. He proposed capping the growth at 1 percent and reducing spending to levels of 2022.
The Democrats, who enjoy the majority in the Senate and White House, have kept on declining the ideas of Republicans. In contrast, McCarthy has just proposed, and there was no bill presentation. It is unsure whether he will have the backing of his slim-majority party members if he brings a bill to vote upon. He avoided questions from media outlets regarding the support of his party members for his plans.
A gauge that analyses default risk has shown the highest levels of default for the United States since the last similar time a decade ago. Debates have started emerging on multiple forums showing signs of worry as the gauge has also peaked. In 2011, the US government received its first credit downgrade over the debt ceiling matter.
In a speech by McCarthy delivered at the New York Stock Exchange, he said that in the upcoming weeks, the Republicans would vote to increase the debt ceiling and reduce expenditure to levels from previous years. They would also tighten the working regulations of social security programs and other societal upliftment measures.
He further warned that the US government is near to raising its hands from the responsibility to repay its financial obligations. The internally divided Congress must take appropriate steps; otherwise, the horrific ripple effect which their government’s default would give rise to will be unimaginable and disastrous.
McCarthy said in his speech that he isn’t looking at slashing taxes. They aren’t even going to reduce defence expenditure. This leaves them with a small room, effectively contracting the budget deficit.
Republicans complain that McCarthy’s plans are not considering the actual pain points, which happen to be the doubling of expenditure on Social Security, Medicare retirement, and healthcare programs.
Last month the White House proposed its budget. It consists of plans to contract the gap by just $3 trillion over 10 years. But the major reforms it wants to execute are an increase in taxes on the ultra-rich and their businesses instead of reducing expenditure.
The 222-213 House majority is the only wall backing McCarthy. This consists of a large number of members who are very adamant in their demands of a deep reduction in expenditure to avoid inaction on the debt ceiling matter.
The Donald Trump administration consisting of Congress members had raised the budget ceiling three times. Now, Congress has to increase the debt ceiling to manage the costs incurred by the earlier passed legislative reforms. This also includes Trump’s 2017 tax cuts and trillions of dollars as monetary assistance whilst the COVID-19 pandemic.
Last month, the Congressional Budget Office (CBO) proposed a temporary list of options to consider reforms for the debt ceiling matter. It gave weightage to heavily increasing taxes on wealthy individuals and corporations to fill the government exchequer than reducing the expenditure.
The Biden administration will move forward with the negotiations with Congress after failing on Tuesday’s deadline. It delayed this because by then, the government officials will be equipped with data on how much income is being generated from which sources and areas where they are going to spend it.
Senator Chuck Schumer, a Democrat of New York and the leader of the majority party, unabashedly said that if Speaker McCarthy moves ahead with his proposal, they are sure to default.