Morning Wire Spending Cuts vs Borrowing: Fixing the Debt Limit | Sunday Extra
Apr 23, 2023
The U.S. has hit a staggering borrowing limit of $31.4 trillion, sparking a showdown in Congress over the debt ceiling. As the White House pushes for an increase, the GOP demands spending cuts in return. The discussion dives into the historical role of fiscal responsibility and the intricacies of public versus foreign debt. Plus, experts highlight the urgent need for reforms to address the national debt, warning of severe economic consequences if action isn't taken soon. It's a riveting look into the future of U.S. fiscal policy!
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Debt Ceiling and Spending Cuts
- The US must raise the debt ceiling, but it should be paired with spending cuts.
- The House Republicans propose capping discretionary spending at 2022 levels with 1% annual growth, saving over $3 trillion.
Biden's Stance and Past Precedents
- President Biden refuses to negotiate the debt ceiling, deeming it irresponsible of Republicans to demand spending cuts.
- However, tying spending cuts to debt ceiling increases has precedent and can be a responsible approach to address over-indebtedness.
Obama-Era Debt Ceiling
- During the Obama era, similar debt ceiling negotiations led to spending caps (BCA) and the unsuccessful "super committee."
- The overly aggressive spending caps under the super committee failed as Congress repeatedly circumvented them.