Republicans should rejoice over the bipartisan deal to avoid debt default
With the country days away from running out of cash, the White House and House Speaker Kevin McCarthy (R-CA) have hammered out a deal to reduce government spending, rescind IRS funds and unused COVID-19 funds, and include pro-growth permitting reform — all while ensuring we avoid default.
All House Republicans deserve praise for securing the most taxpayer-friendly bill possible.
Republicans understand the status quo is untenable. With our national debt approaching $32 trillion, we all agree that Washington’s spending habits are unsustainable. Both parties are guilty for the mess we find ourselves in, but President Joe Biden’s reckless spending of the last two years is disproportionately irresponsible. Spending trillions of dollars lit the match that created the inflationary environment of today — straining both the wallets of families and our cash reserves.
For months, Biden refused even to meet with Congress on how to raise the debt ceiling responsibly. It was this president that pushed the country to the brink of default — not Republicans — no matter how many times he tweeted to make this falsity a fact.
Even a plurality of voters agrees that spending reforms should be a part of a debt ceiling bill, indicating that much like Republicans, voters recognize that uncontrolled spending is unsustainable.
Much to their credit, McCarthy and the Freedom Caucus have fought to right our fiscal ship. Reports indicated that the provisions are similar to the Limit, Save, Grow Act, which includes spending caps going back to at least fiscal 2022, a clear reduction to government spending. These are real, tangible savings over the next decade.
Reducing spending is a hard thing to do in Washington, and enactment of the Fiscal Responsibility Act would be a monumental win for taxpayers and the free market community.
No one benefits from a disastrous default because it would have an unprecedented impact on everyday people. As I’ve written in the past, a default would hurt the economy, slam the housing market, plunge the stock market, and actually make financing government spending more expensive. It’s a scenario that needs to be avoided at all costs.
New research shows just how much harm could be inflicted if this deal falls through.
Our friends at the American Action Forum note that the results of such a default “would be a rapid and deleterious repricing of assets throughout financial markets, significant turmoil in federal governance, and a high likelihood of recession.”
They also rightly compare this situation to the debt crisis of 2011, the last time the U.S. came this close to a default, which caused a credit downgrade, a stock market sell-off, and a drop in household wealth. Today, even repeated near-default episodes could “erode confidence” in the U.S. and may affect the country’s credit.
Given the high risks of a government default to the economy, everyday Americans, and the fiscal security of the government, both sides need to come together and support a reasonable and responsible solution that protects the economic stability of the country while putting us on stronger fiscal footing. An agreement that cuts spending, claws back unused funds, and streamlines approvals for energy projects is a great bill for all people.
Republicans are making significant progress to ensure we all get the best deal possible for the country.
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