The GOP’s Current Plan To Cut Spending Is a Political Failure
The long and tedious battle for House speaker ended with the GOP arguably more focused on fiscal responsibility and cutting spending. To accomplish this, Republicans are demanding spending cuts in exchange for raising the debt ceiling. Asking for some future fiscal discipline before allowing Uncle Sam to borrow yet more money is well worth it, but carelessly chosen goals could derail the whole enterprise.
Congress will eventually have to pass legislation to authorize the Department of Treasury to borrow money above and beyond the current debt-ceiling level to avoid a default. Besides, when previous Congresses—both Republican- and Democratic-controlled—passed spending bills paid for with money they didn’t have, legislators implicitly agreed to raise the debt ceiling as needed. But that doesn’t mean that today’s legislators can’t demand some spending restraint going forward.
Treasury Secretary Janet Yellen has already announced that the Treasury will begin “extraordinary measures” to ensure the federal government is able to meet its payment obligations even if the ceiling isn’t immediately raised. That should allow payment obligations to be met without default until early June, giving legislators time to negotiate an agreement to raise the debt ceiling. That has been done before and can be done again.
And this is the path Republicans now intend to follow, which is, in theory, great. But from the look of it, they’re going about it the wrong way. According to the Manhattan Institute’s Brian Riedl, the GOP plan so far is to cut $130 billion from discretionary appropriations. Unfortunately, the defense budget and veterans health funds are excluded from cuts, despite making up $993 billion
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