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Saturday, September 30, 2023

Debt Ceiling Plan: Good or ‘Disaster’ Based on Politics?

As new information emerges regarding the debt ceiling agreement reached by President Joe Biden and House Speaker Kevin McCarthy, reviews and opinions are starting to surface.

Even prior to the release of specific details, some politicians have already criticized the deal, claiming it falls short of addressing the nation’s debt. On the other hand, concerns have been raised that the agreement might be too austere, potentially causing harm to low-income Americans.

To pass through the closely divided House of Representatives and gain the necessary 60 votes to advance in the Senate, the legislation will likely require support from a significant number of politicians from both parties.

Many legislators have chosen to withhold judgment until they have a chance to examine the final details, which were not made public until Sunday evening. The resulting 99-page bill from the negotiations between Biden and McCarthy will shape opinions and perceptions of the agreement.

Let’s take a look at the initial reception and feedback surrounding the agreement thus far:

Early concerns

Initial objections to the debt ceiling agreement are primarily arising from the ranks of the most conservative members of Congress, particularly those belonging to the hardline House Freedom Caucus. This faction often finds itself at odds with GOP leadership on various issues.

“I think it’s a disaster!” tweeted Matt Rosendale, a Republican from Montana.

“Fake conservatives agree to fake spending cuts,” tweeted Senator Rand Paul, a Republican from Kentucky.

Representative Ralph Norman, a Republican from South Carolina, expressed his discontent with the debt ceiling agreement on Twitter, stating, “This ‘deal’ is insanity. A $4T debt ceiling increase with virtually no cuts is not what we agreed to. Not gonna vote to bankrupt our country. The American people deserve better.”

Republican leaders were aware from the beginning that they would face opposition from some members in any compromise reached with a Democratic-led White House and Senate. The key question has always been whether the agreement would garner enough support from Democrats to counterbalance those defections.

Democrats weigh in

While some Democrats have reservations about the approximate freeze on spending for non-defense programs next year and the extension of work requirements to more food stamp recipients, their initial reactions have been cautious as they await further details.

Representative Annie Kuster, a Democrat from New Hampshire and chair of the center-left group called the New Dems, which has around 100 members, expressed confidence in the White House negotiators’ ability to deliver a viable, bipartisan solution to resolve the crisis.

Senator Chris Coons, a Democrat from Delaware, believed that the agreement represented the best possible deal given the demands put forth by House Republicans. He emphasized that avoiding default was of paramount importance.

The main opposition to the agreement is expected to come from the more liberal members of the Democratic caucus. Representative Pramila Jayapal, a Democrat from Washington state, has been vocal in her opposition to additional work requirements for certain individuals receiving food and cash assistance.

On CNN’s State of the Union program, she described the debt ceiling agreement as a “terrible policy.” However, she also mentioned that she is awaiting the legislative text to assess the extent of exemptions from work requirements that President Biden was able to secure for veterans, homeless individuals, and those transitioning out of foster care.

Representative Pramila Jayapal, the chair of the Congressional Progressive Caucus, expressed uncertainty about the final numbers of the agreement, stating, “And so what do the numbers look like at the end of the day, I’m not sure.” However, she maintained that it was bad policy and conveyed her direct conversation with President Biden, where she expressed concerns that it conveyed a lack of trust in those who are in need.

When asked if the Democratic leadership and the White House should be worried about the progressive caucus supporting the bill, Jayapal responded, “Yes, they have to worry.”

The inclusion of a provision that expedites the approval of the Mountain Valley Pipeline, a natural gas pipeline in West Virginia and Virginia, has also raised concerns among many Democrats.

Previous bills had successfully kept this provision out, but Senator Joe Manchin, a Democrat from West Virginia, and other members of the West Virginia delegation managed to have it included in the debt limit bill. Environmental groups have strongly criticized its inclusion.

Business group backing

As the nation approaches the risk of a potential default, which could have significant implications for the US and global economy, major business groups have been urging prompt action from Washington to raise the debt ceiling.

The Business Roundtable, representing over 200 chief executive officers, has called on Congress to swiftly pass the bill. The group’s CEO, Joshua Bolten, stated, “In addition to raising the debt ceiling, this agreement takes steps towards putting the US on a more sustainable fiscal trajectory.

This deal also makes a down payment on permitting reform, helping to clear the path for new energy infrastructure projects.”

The US Chamber of Commerce has also encouraged a “yes” vote and emphasized that the vote will factor into the group’s assessment or “scorecards” of congressional members based on their support for business priorities.

Economists have made it clear that even a short-term breach in the nation’s ability to fully meet its financial obligations would disrupt the economy. Interest rates would rise, and financial markets would experience turbulence as a result.

“The gravity of this moment cannot be overstated,” said Suzanne Clark, the US Chamber of Commerce president and CEO.

Watchdog groups approve

Advocacy groups have consistently raised concerns about Congress enacting policy priorities without adequately funding them, but their warnings have often been disregarded. Nevertheless, some view the current agreement as a positive move forward.

The Committee for a Responsible Federal Budget acknowledged that if the legislation is approved, it would mark the first significant budget agreement aimed at reducing the deficit in nearly twelve years. This recognition highlights the potential significance of the agreement in addressing long-standing fiscal challenges.

“The process was tense, risky, and ugly, but in the end, we have a plan to enact savings and lift the debt ceiling, and that is what is needed,” said Maya MacGuineas, the group’s president.

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