US Debt Ceiling: McCarthy Calls for 1% Federal Spending Cap

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Facts

  • On Monday, US House Speaker Kevin McCarthy (R-Calif.) pledged to pass legislation to raise the nation's debt ceiling on the condition that future federal spending be capped at 1%.1
  • McCarthy said in a speech at the New York Stock Exchange that House Republicans would vote on a measure to lift the debt ceiling into the next year in exchange for freezing spending at last year’s levels and other concessions.2
  • In addition to limiting federal spending on items such as the military and discretionary programs, the measure would also claw back COVID aid and require Americans to work to receive federal benefits.3
  • As the Senate majority and Pres. Joe Biden are opposed to efforts to link the debt-limit increase to other fiscal policy changes, the plan would most likely not pass the Senate.3
  • Biden and McCarthy haven’t spoken or met over the debt-ceiling issue since Feb. 1.4
  • After hitting the borrowing limit earlier this year, the Treasury Dept. implemented special measures to avoid a default. However, without a compromise, the US is predicted to default between July and September.3

Sources: 1Al Jazeera, 2New York Times, 3Wall Street Journal, and 4ABC News.

Narratives

  • Republican narrative, as provided by Townhall. While Republicans are sympathetic to Americans’ financial struggles, Biden continues to hide from the issue and refuse to negotiate. It’s time for the president to lead by coming to the table with McCarthy and for Democrats to acknowledge their reckless spending got the US into this predicament and must be reined in. Tying the debt ceiling to spending levels is the only way to make the country fiscally responsible.
  • Democratic narrative, as provided by AlterNet. Republicans are holding the US economy hostage in an attempt to get their way. In his speech, Speaker McCarthy presented an extreme wish list that increases costs for hard-working families, taking food stamps and health care away from millions of Americans without actually reducing the deficit. This is dangerous and is what will ultimately lead to a default.
  • Cynical narrative, as provided by ABC News. This government paralysis is just one of the many symptoms of a nation plagued by partisan games, with leaders more concerned with tearing each other down than building the country up. As both sides refuse to compromise, the US is creeping closer to the edge of an economic crisis — something must be done to end this deadlock.

Predictions