Questions Republican Guests Should Answer on Looming Default Crisis

From:  Liz Zelnick, Accountable.US’ Director of Economic Security and Corporate Power  

Date:   April 14, 2023

Re:      Questions Republican Guests Should Answer on Looming Default Crisis 

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House Speaker Kevin McCarthy’s widely-anticipated speech on Monday before the New York Stock Exchange is an opportunity to ask Republican panelists: How is the looming default crisis not entirely manufactured by House Republicans when all the signs point to them? It’s a tough question to answer as McCarthy himself has already admitted the standoff begins and ends with the MAGA House majority, bluntly admitting recently on Bloomberg TV: “We’re never going to move a bill that just raises the debt ceiling.”

McCarthy has been warning his Wall Street donors for weeks that he has no idea how to get out of the mess he made by opposing paying our nation’s bills without strings attached, even resorting to preemptively blaming his own top lieutenants. While details are scant, expectations are that the Speaker’s speech will desperately try to deflect blame away from his own stunning lack of leadership and onto the President. 

Speaker McCarthy’s decision to travel to New York to try to pass the buck smacks of a desperate political stunt — and only raises more questions why he’s not staying in Washington and working overtime to find a path forward that can even pass in the House.    

It says it all about McCarthy’s ineptitude as a leader. The Speaker has let MAGA extremists call the shots since seizing the House. Since Day One, they’ve insisted on using the threat of defaulting on our debt obligations, a reckless act never seen in our nation’s history, as leverage to exact devastating cuts to programs that would hurt seniors, veterans, and middle-class families. To date, McCarthy has not bothered to put forward a formal plan to avoid default and instead is reportedly “throwing everything at the wall” and patching together a “wish list” of right-wing cuts for average Americans with “no chance of passing the Senate” – and with no mention of billion-dollar corporations or their billionaire donors contributing their fair share in taxes. 

It’s time for McCarthy and his defenders in Congress to answer some hard questions, including: 

1)    Why Do MAGA Republicans Offer Nothing But A Lose-Lose Proposition for Average Americans?  

While no official proposal for avoiding default has been put forward, Republicans in Congress have floated a litany of cuts and barriers to relief they want that would harm millions of Americans. MAGA ideas include slashing Social Security and Medicare benefits; gutting student debt relief, clawing back IRS resources that go after wealthy tax cheats, decimating public safety; shipping American clean energy jobs overseas; and erecting cruel and counterproductive new barriers to food assistance and Medicaid, a program that provides health services to women, children and seniors. 

 If their demands are not met, they threaten to default on our debt, which would have severe consequences for Wall Street and Main Street alike. Medicare payments for seniors would be missed. Seniors would not receive their Social Security. Veterans would not get their VA benefits. 6 million people would lose their jobs. $15 trillion in household wealth would be erased. Unemployment would skyrocket to 7 percent. Average workers near retirement could take a $20,000 hit to their retirement savings.  

New homeowners could see their monthly mortgage payment go up more than $150,

costing an extra $54,300 over the life of their loan. The markets would plummet. All told, it would be an unmitigated disaster for the economy – with a deep recession all but guaranteed. 

Average American families lose either way under this House Republican brinkmanship. They aren’t offering a real choice, only political stunts and economic self-sabotage.

2)    Why Do None of the Republican Debt Proposals Ask Wealthy Corporations and Billionaires to Pay Their Fair Share?

Notably, of all the House Republican default plans circulated, not one has made any mention of big corporations paying their fair share despite enjoying hundreds of billions of dollars in wasteful tax cuts that fuel the deficit. MAGA extremists keep finding new ways to punish America’s middle class, seniors and most vulnerable while never asking highly-profitable corporations and their billionaire donors to contribute a dime more. 

3)    Why Do House Republicans Pretend to Care About Debt Only When It’s Politically Convenient?

It is hard to take Congressional Republican ‘concerns’ over debt seriously given their long history of exacerbating it. In fact, one study found “if not for the Bush tax cuts and their extensions—as well as the Trump tax cuts—revenues would be on track to keep pace with spending indefinitely, and the debt ratio (debt as a percentage of the economy) would be declining. Instead, these tax cuts have added $10 trillion to the debt since their enactment and are responsible for 57 percent of the increase in the debt ratio since 2001, and more than 90 percent of the increase in the debt ratio […].”

 Not a single Republican in Congress voted for President Biden’s Inflation Reduction Act even after the Congressional Budget Office (CBO) found it would reduce deficits by over $58 billion over a decade. Adding insult to injury, among the debt proposals House Republicans have floated in recent weeks includes gutting resources in the Inflation Reduction Act for holding wealthy tax cheats accountable. If these Republicans have their way, the nonpartisan CBO found freezing these IRS enforcement resources would add $114.4 billion to the deficit over a decade.

And many of these same Republicans voted to pay the nation’s bills “with minimal drama” while the Trump administration added $7 trillion in federal debt – debt the Biden administration inherited.

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