Congressional Democrats on Thursday forcefully called out their Republican colleagues for holding the economy hostage by refusing to raise the country's $31.4 trillion debt ceiling without major spending cuts, risking the first-ever U.S. default.
Democrats declined to even try to raise the nation's
arbitrary and arguably unconstitutional borrowing limit while they still controlled both chambers of Congress during last year's lame-duck session, setting up the current fight. Because the ceiling has already been hit, Treasury Secretary Janet Yellen is now taking "extraordinary measures" to give lawmakers more time to act, but the deadline to do so looms, with a default possible as early as June, based on the latest federal estimates.
"This report shows that a Republican default crisis means real dollars coming out of American families' wallets and savings decimated."
Senate Majority Leader Chuck Schumer (D-N.Y.) and House Minority Leader Hakeem Jeffries (D-N.Y.) along with other key party members came together Thursday to unveil an alarming six-page Joint Economic Committee (JEC) Democratic staff
"This report shows that a Republican default crisis means real dollars coming out of American families' wallets and savings decimated. This is not a hypothetical exercise to the millions of Americans—including veterans and seniors—who rely on the United States government for benefits, pensions, and disability," Schumer said in a statement.
"House Republicans' approach is dangerous and destabilizing," he added. "Even the threat of a breach will raise costs on everything from car loans to mortgages. Republicans are gambling with Americans' savings, benefits, and lives, all to play a political game."
Specifically, according to the report, if the GOP forced a historic and "catastrophic" default:
- The average worker close to retirement could take a $20,000 hit to their retirement savings;
- Small business loans could go up $44 a month, costing about $2,500 more over the course of the loan;
- Debt-limit threats could weaken the dollar and push up prices for consumers;
- A typical new homeowner could see their monthly mortgage payment go up more than $150, costing them an extra $54,300 over the life of their loan;
- A family buying a new car could pay over $800 more if interest rates spike;
- Americans with private student loans could see their monthly payments rise by $23, costing them nearly $4,200 in total; and
- Families with credit card debt could see their monthly payments rise, making it harder for them to become debt-free.
"A decade ago credit rating agencies downgraded the U.S. credit rating after Republican debt limit brinkmanship, and it drove borrowing costs for the American people higher in a variety of ways," noted Rep. Don Beyer (D-Va.). "This Joint Economic Committee report quantifies what kind of damage regular people could see if that happens again, and it is very bad."
"This would affect everyone who borrows money, including the United States government, which would have to pay more in its borrowing costs," he explained. "In other words, Republican hostage-taking on the debt limit would actually increase the deficit."
Beyer, Schumer, and Jeffries were joined at the news conference Thursday by Rep. Gwen Moore (D-Wis.) as well as Sens. Tina Smith (D-Minn.) and Martin Heinrich (D-N.M.), the JEC chairman-designate, who stressed that "the debt ceiling is not a bargaining chip."
While several of them slammed "MAGA Republican in the House," 71-year-old Moore chose to describe the GOP lawmakers whose actions are jeopardizing not only the U.S. but also the global economy another way.
"I have a great-granddaughter that falls out and rolls on the floor when she can't have her way. I tell her she needs to get up because she's not gonna get it," Moore said. "Republicans need to get up and stop holding our economy hostage."
"We are not going to devastate our seniors and our children, and we will not sabotage the world's standard credit rating," the congresswoman declared. "Republicans need to get up off the ground and raise the debt limit!"
Adding to concerns about the U.S. and global economies are recent bank turmoil and repeated interest rate hikes by the Federal Reserve—which, along with Congress, is facing criticism for regulatory rollbacks that experts tie to the bank failures.
Punchbowl Newsreported Wednesday:
Instead of expressing caution, senior GOP lawmakers are leaning into their plans to demand spending cuts in return for raising the nation's borrowing limit. The Republicans we spoke to doubled down, arguing the same factors that led to the failure of
Silicon Valley Bank and Signature Bank necessitate urgency in reducing government spending.
"This is the best time to do it," House Budget Committee Chair Jodey Arrington (R-Texas) said of the debt limit fight. "That interest rate pressure that is creating some risk in the banking industry is a result of the inflation that has been induced by the massive amounts of spending."
Arrington's panel will play a central role in the Republican posture heading into negotiations with President Joe Biden. While House Republicans have yet to release their budget, GOP leaders have vowed to roll back spending to FY2022 levels. That would mean a cut of roughly $130 billion from last year's funding level. Democrats and the White House
have assailed the plan as an attack on working families, seniors, and veterans, while Republicans insist the cuts are necessary to rein in inflation.
The Texas Republican said it "makes sense that when you have a debt ceiling negotiation," lawmakers would "reflect on the indebtedness of our country" and look to cut spending at the same time.
Punchbowl noted similar remarks this week from Reps. Carlos Gimenez (R-Fla.) and John Rose (R-Tenn.) along with GOP Conference Secretary Lisa McClain.
Biden introduced his budget blueprint for FY2024 earlier this month. Though progressives condemned the president's historically high request for military spending as "madness" they also praised his push for massive social investments as well as tax hikes targeting wealthy individuals and corporations.
Meanwhile, "House Republican leaders did not respond to multiple questions from USA TODAY about when the GOP budget would be ready," the newspaper reported Wednesday.
As USA TODAY detailed:
An initial proposal from the House Budget Committee includes cuts to the Environmental Protection Agency, Biden's student debt cancellation, and funding for electric vehicles for the U.S. post office.
It also includes reinstating work requirements to the Temporary Assistance for Needy Families and the Supplemental Nutrition Assistance Program, or SNAP.
A proposal from the House Freedom Caucus includes $131 billion in cuts for fiscal year 2024.
"Extreme MAGA House Republicans are showing us what they value: tax breaks for the rich," Biden said of the caucus' proposal. "They demand the biggest Medicare benefits cut in decades, ship jobs overseas, defund law enforcement, devastate our national and border security. It's a gut punch to the middle class."
As Liz Zelnick from the watchdog Accountable.US warned, "The MAGA extremists running the House fully intend to manufacture a disastrous default crisis by making demands they know to be nonstarters—like letting wealthy tax cheats and big polluters off the hook."