- Senate Republicans adopted a resolution to press for spending cuts in exchange for raising the debt ceiling later this year.
- Ted Cruz called it “a step in the right direction,” though other senior Republicans downplayed it.
- A top Democrat branded it as “Obama-era economic sabotage.”
- See more stories on Insider’s business page.
Senate Republicans are expressing renewed alarm over the nation’s rising federal debt, as President Joe Biden is about to cross the 100-day mark of his administration.
GOP senators huddled together on Wednesday and adopted numerous symbolic resolutions meant to govern their party in the upper chamber. They moved closer this week to picking a fight over the national debt, adopting a statement put forward by Sen. Rick Scott of Florida to press for spending cuts in exchange for raising the debt ceiling later this summer.
“I think that’s a step in the right direction in terms of reining in out-of-control spending,” Sen. Ted Cruz of Texas told reporters after the gathering.
That elevates the prospect of a brawl between Republicans and the Biden administration in the summer — a time when the White House will likely be herding a multitrillion-dollar infrastructure package through Congress. Democrats are assailing the GOP for aiming to take the “debt ceiling hostage” with a move that could ripple through the global economy.
“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,” Sen. Ron Wyden of Oregon, chair of the Senate Finance Committee, said in a statement to Insider.
House Republicans brawled with the Obama administration on the debt ceiling a decade ago in a spate of brinksmanship. The 2011 fight between former President Barack Obama and conservative lawmakers unnerved the stock market in the wake of the financial crisis, causing the first-ever downgrade of the country’s debt rating.
Senior Republicans are downplaying the significance
The debt ceiling refers to the limit that the federal government can borrow. A two-year extension which took effect in 2019 as part of a bipartisan budget deal is set to expire in July of this year. Under Trump, Congressional Republicans signed onto raising the debt limit without demanding spending cuts; also, the deficit was growing even before the pandemic.
Republicans gave the green light for a surge of red ink in the 2017 corporate tax cuts as well as military spending increases. With pandemic-related emergency spending, the debt grew by another $7.8 trillion under Trump, Propublica reported.
If Republicans keep a hard line against raising the debt ceiling, the federal government would default on its debt obligations in an unprecedented event.
Still, the resolutions are almost surely entirely symbolic. Senior Republicans downplayed the importance of the debt statement. Sen. John Cornyn of Texas, the fourth-ranked Republican, told reporters it was “aspirational.”
Then Sen. Richard Shelby of Alabama, the top Republican on the Appropriations Committee, casted it as insignificant.
“It’s a good statement, probably meaningless,” Shelby said after the meeting. “But it’s a good statement.”
Donald Schneider, the GOP’s former top economist on the House Ways and Means Committee, argued while Republicans want spending cuts, he did not believe they would line up against raising the debt limit.
“There may be some who are legitimately open to having a big fight or want to make a show over it, but I don’t think Democrats are gonna have a problem passing a debt limit increase,” he told Insider.
Republicans staunchly oppose President Joe Biden’s $2.3 trillion infrastructure plan, decrying its size and planned corporate tax increases. Their criticism of mounting deficits was also apparent in Biden’s $1.9 trillion stimulus law, which passed without any GOP votes.
Chair Jerome Powell recently said the cheap cost of borrowing did not make the debt a perilous issue for the short term.”Given the low level of interest rates, there’s no issue about the United States being able to service its debt at this time or in the foreseeable future,” he told NPR last month.
Goldman Sachs urged lawmakers this month to lift the debt ceiling early to prevent economic uncertainty. But it projected the federal government had room to continue borrowing until “the final days of September or very early October.”