WASHINGTON — Republicans on Wednesday unveiled a bill that would cut billions in federal spending and roll back some of President Biden's policy priorities in exchange for lifting the debt ceiling for a year.
After trying and failing to rally lawmakers around their own budget blueprint, Republican leaders have instead framed the bill as an opening bid for Democrats and a way to get the White House to come to the negotiating table.
Mr. Biden insisted that Republicans raise the debt limit without any conditions and said he would not meet with them to discuss spending cuts until they agreed on their own fiscal plans.
Speaker Kevin McCarthy said he will submit the new law, which Republicans claim will save the state $4.5 trillion, to a vote next week.
Negotiations have so far been frozen, and time is running out: The United States, which has reached a $31.4 trillion cap on how much it can borrow, could run out of cash to pay its bills as early as June.
That could have disastrous effects, potentially causing a global financial crisis and a painful recession in the United States.
While the two sides could begin talks soon, Mr. Biden is unlikely to accept few, if any, of Mr. McCarthy's proposals. Here's a look at what was on the bill.
Revoke unused Covid-19 aid funds
Republicans are proposing a scrap of unspent pandemic relief funds, which they estimate will return an estimated $50 billion to $60 billion to government coffers.
In 2020 and 2021, Congress approved an estimated $4.6 trillion in stimulus funds, intended to help the country recover from the effects of the coronavirus pandemic. Most of that money has already been spent.
However, there are remaining funds for programs that provide grants to healthcare providers, medical care for veterans, retirement benefits, and assistance to public transit agencies. Some programs have unspent money because the apps are still open or the funds don't run out until next year. Others, including those designed to help aircraft manufacturers pay compensation costs, are not expected to use all of their allocated funds.
Biden administration officials have resisted the effort, as they expect most of the unspent grant will be used before it expires.
Limit spending to fiscal 2022 levels
House Republicans have long complained that federal spending is out of control, and the conference kicked off this year with aspirations to balance the budget in 10 years. But that would require major spending cuts for a popular federal program, something no GOP leaders have been able to do to unify their conference. The bill instead aims to appease conservatives by proposing a spending freeze to last year's levels.
That would effectively force budget cuts. Because the cost of government programs increases with inflation over time, lawmakers have had to cut some programs to stay under the cap. That would require Republicans to identify $3.6 trillion in spending cuts over a decade, by their own calculations, and this bill does not elaborate. Instead, Republican leaders passed the decision to the Appropriations Committee.
One battle for appropriators to resolve is how to balance cuts between defense-related spending and spending on other domestic programs, such as environmental protection and education. House Republicans in particular have loathed adopting cuts in military spending, but leaving those budgets intact would require steeper cuts for other programs.
Democrats have been trying to make that part of the proposal politically toxic. They released a memo on Thursday accusing Republicans of trying to kill manufacturing jobs by cutting government subsidies for low-emission energy technologies.
Karine Jean-Pierre, White House press secretary, told a briefing that the White House was still reviewing the plan but widely dismissed it as not serious and dangerous for Americans “who struggle every day to make ends meet.”
Even if Republicans manage to push the limits, there's no guarantee they'll produce anywhere near the savings they've promised. Future lawmakers could easily choose to ignore it, as they often did with spending limits agreed by President Barack Obama and Republican members of Congress to avoid defaulting on debt in 2011.
Roll back some of the Biden administration's climate moves
The bill would undo most of the Biden administration's health, climate and tax bill, which Democrats passed last year and called the Reducing Inflation Act.
Republicans are proposing lifting a series of energy tax credits in legislation aimed at reducing greenhouse gas emissions, including incentives for the use of pre-owned electric vehicles and the production of electricity and clean fuels. Republican lawmakers claim the move will save an estimated $271 billion to $1.2 trillion.
Republicans' plans also include proposals in a separate energy bill passed by lawmakers in the House of Representatives last month to increase domestic energy production. Although the bill has yet to be passed by the Democratic-controlled Senate, it includes provisions that would expand the country's mining and fossil fuel production and speed up necessary infrastructure development by reforming the permitting process that could take up to five years.
Claws back funding from the Internal Revenue Service
Republicans also vowed to “defund Biden's IRS army” by canceling most of the new funds given to tax collection agencies to improve customer service and crack down on tax fraud.
The Inflation Reduction Act approved an additional $80 billion in funding for the IRS, which has struggled to deal with delinquent tax filings and answer taxpayers' calls because of dwindling resources for years.
The funding has come under intense scrutiny from conservatives, who claim it will be used to increase vetting rates for the average taxpayer. IRS officials have reiterated that they will not raise the audit rate above the “historic level” for taxpayers making less than $400,000 a year and will focus on improving compliance among large corporations and the wealthy.
Cutting that spending would actually add to the federal deficit, the Congressional Budget Office estimates. That's because the money is projected to help the IRS crack down on taxpayers who don't pay their debts — bringing estimates New revenue $200 billion more than a decade. That income will be lost if the funds are withdrawn.
Enforce stricter employment requirements for food stamp and Medicaid recipients
The proposal would introduce stricter work requirements for recipients of food stamps and Medicaid benefits, which Republicans say would help attract more people into the workforce and save an estimated $110 billion to $120 billion. Republican leaders backed down from pursuing more drastic terms after lawmakers facing challenging re-election battles in the districts raised concerns.
The act would make able-bodied adults without dependents who receive federal food assistance and Medicaid benefits subject to work requirements until they are 55, upping the current age from 49. It also seeks to close a loophole Republicans claim that the state abuses, allowing officials to exempt food aid recipients from job requirements.
Block student loan forgiveness
The bill would undo a Biden administration action to write off student loan debt of up to $20,000 for millions of borrowers earning under $125,000 a year. The move would erase more than $400 billion in debt, despite the appearance of a conservative Supreme Court majority very sceptical on the legality of the plan ahead of a decision expected in June.
Republicans will also block the second student loan amendment the Department of Education has announced, which would reduce payments to future borrowers who earn relatively low incomes after college. The department has estimated that the plan will cost more than $100 billion over a decade, although the Penn Wharton Budget Model of the University of Pennsylvania pegs the cost at about $350 billion.
Raised the debt limit to March 2024
In return for spending cuts and policy changes, Republicans will raise the statutory limit on how much the United States can borrow until March 2024, or until the nation's debt grows to $32.9 trillion.
The timeframe for that extension would be far shorter than Biden would have liked, guaranteeing another showdown to shake up the economy as the presidential campaign heats up next year.
The United States could default on its debts if the two sides fail to reach an agreement. That has the potential to cause a financial crisis, undermine economic results and lead to a deep recession if the country cannot pay all of its bills on time.
The state may not be able to pay salaries to federal workers or Social Security checks, among other things. A debt default can also have global repercussions and destabilize bond markets around the world, as US Treasury bonds are usually seen as one of the safest investments.
Chris Cameron reporting contribution.