What's New in Washington - April 2023

Looming large in Washington right now is the upcoming debt limit debate. With the United States expected this summer to hit the statutory cap on the amount of money the government can borrow to pay its financial obligations, Republicans led by Speaker of the House Kevin McCarthy (R-CA) and Democrats led by the President are engaged in a public debate over whether and the extent to which to cut federal spending as a condition of raising the debt limit. The failure to raise the debt limit could result in our nation’s first ever default and could also put the appropriations process at risk, increasing concern over a government shutdown in late September.

While Democrats continue to insist on a clean debt ceiling bill that raises the national borrowing limit without any other policy conditions, House Republicans this week introduced the Limit, Save, Grow Act of 2023 that raises the debt limit until March 31, 2024, or by $1.5 trillion—whichever occurs sooner—accompanied by policies intended to limit federal spending, save taxpayer dollars and grow the economy. House Republicans contend the proposal would save more than $4.5 trillion in taxpayer dollars. Key components of Speaker McCarthy’s debt limit plan are as follows:

• Limit: terminate government spending and establish spending levels for fiscal year (FY) 2024 at FY 2022 levels and allow for no more than 1% annual growth over the next 10 years.
• Save: reclaim unspent COVID-19 funds; eliminate funding for new Internal Revenue Service (IRS) agents; repeal Inflation Reduction Act (IRA) tax credits; and prohibit student loan forgiveness.
• Grow: restore assistance programs; reduce childhood poverty; give Congress oversight over the Biden-Harris administration’s spending policies; pass H.R.1 to unleash American-made energy and reduce reliance on foreign adversaries.

This special edition issue of What’s New in Washington examines the debt limit debate against the backdrop of past debt limit negotiations, highlighting key considerations around federal spending and policies playing a role in the current negotiations.