Just because Mitch McConnell wants to surrender on the debt limit, doesn’t mean that the House GOP is going along with him. In a closed meeting today, Eric Cantor, who I guess is Speaker-in-Waiting at this point, introduced a series of slides that he claims are the “Democratic options” on the debt limit. He lists three “proposals”:
1) “The Reid Proposal.” Cantor says this includes some discretionary spending cuts, nothing on safety net programs, and less than $1 trillion in overall solutions.
2) “The Biden Framework.” This is Cantor at his most disingenuous. You remember the Biden talks, yes? Negotiators came up with anywhere between $1-$2 trillion in spending reductions, depending on who you believe, contingent on adding revenue into the mix. But before talking about revenue, Cantor broke from the talks. Instead of acknowledging this, what Cantor told House Republicans today makes it seem like there are only $2 trillion in cuts in that plan, and a “revenue-neutral” series of tax changes. But that’s not what was proposed in the talks! Interestingly, Cantor breaks this down as $1.1 trillion in discretionary cuts, “modest” increases in both means testing and co-pays in Medicare, the $100 billion Medicaid “blended rate” reduction in federal participation, and no changes to Social Security. This would also cut $20 billion from food stamps and $17 billion from prescription drugs for Tricare patients, probably also by cost-shifting. There’s $300 billion in interest savings in there to get to $2 trillion, meaning Cantor couldn’t even get to the number on his own.
3) “The Big Deal.” This is the deal that Obama offered, with chained CPI (Social Security benefit cut), increasing the Medicare eligibility age, $1.2 trillion in discretionary spending cuts, a decoupling of the Bush tax cuts to allow the tax rates for the wealthy to expire, a total of $1 trillion in revenue and a promise for comprehensive tax reform at a later date.
Cantor elucidated three principles for House Republicans. “No tax increases,” “Dollar for dollar,” and “Spending controls and caps.” The “Big Deal” has tax increases, so that’s out. The “Reid Proposal” is not dollar for dollar, meaning that it doesn’t match one dollar of increase in the debt limit with one dollar of spending cuts. So that’s out. The only thing left is the fake “Biden framework” that Cantor is basing on right up to the time that he left.
But here’s what Cantor may plan to do. He might put his rendition of the Biden framework up for a vote, with $2 trillion in spending cuts, no revenues, and an increase in the debt limit by the same amount. It would pass the House but then run aground in the Senate, because it represents a break from the actual deal in the Biden talks. But whether that means that the McConnell last-resort plan gets picked up at the last minute is unclear.
It’s worth reminding everyone that real interest on government debt is actually negative right now, meaning that the government has the capacity to borrow at no cost and use that money to finance whatever projects it wishes. But that’s not the argument we’re having right now. Instead, we’re talking about how best to hurt the economy and potentially violate the Constitution in the process.