If the GOP takes back control of Congress after the midterm elections, they plan to use the debt ceiling and government funding deadlines to pressure Democrats into making spending reductions.
Republicans who are against government spending may try to shut it down, but they have failed to do so in previous debates over Obamacare and the Trump border wall. Economic analysts warn that their likely refusal to raise the debt ceiling might push the country dangerously close to default.
The Treasury Department is permitted to borrow funds under the debt ceiling, which is presently fixed at $31.4 trillion, in order to make timely and full payments on all of the country’s obligations. The federal government can either increase it to a new spending level or suspend it through a specific date when it gets close to that limit, which is most likely in the second half of 2023.
Inaction would result in the U.S. government losing its ability to borrow money and limiting its ability to spend only what it receives in taxes and other sources of income.
That would result in historically large reductions in funding for hundreds of other federal programs, including Social Security, Medicare, and Medicaid, along with a wave of negative economic effects.
McCarthy declined to “predetermine” conversations when asked whether spending cuts would need to include adjustments to entitlement programs like Social Security and Medicare.Following the midterm elections, Republicans are anticipated to retake control of the U.S. House, however it is less certain if they would obtain a majority in the Senate.
The Cook Political Report with Amy Walter revised its forecast for Republican gains in the House this week from 10 to 20 seats to 12 to 25 seats.
The Cook Political Report rates three seats controlled by Democrats and two seats held by Republicans as “toss up,” making the future of the 50-50 Senate less certain.
