U.S. Treasury Secretary Janet Yellen has indicated that the federal debt ceiling limit could be reached by June 1, 2023. Action will be necessary to raise that limit. As matters stand in early May 2023, however, President Joseph Biden and congressional Democrats have quite specific views on how to proceed. They favor developing a clean bill involving no restrictions on current federal government expenditures. Led by House Speaker Kevin McCarthy (R-CA), he and his Republican colleagues in that chamber have an entirely different perspective.
House Republicans on April 25, 2013 introduced the Limit, Save, Grow Act of 2023 (H.R. 2811). It passed the next day on a vote of 217-215. This bill increases the federal debt limit and decreases spending. It also repeals several energy tax credits; modifies the permitting process and other requirements for energy projects; expands work requirements for the Supplemental Nutrition Assistance Program (SNAP) and other programs; and nullifies regulations for the cancellation of federal student loan debt. Specifically, the bill:
· Suspends the debt limit through March 31, 2024, or until the debt increases by $1.5 trillion, whichever occurs first;
· Establishes discretionary spending limits for the 10-year period FY2024-FY2033 that include decreases in discretionary expenditures;
· Rescinds certain unobligated funds that were provided to address COVID-19 and to the Internal Revenue Service;
· Nullifies certain executive actions and regulations for cancelling federal student loan debt and implementing an income-driven repayment plan for student loans;
· Repeals or modifies tax credits for renewable and clean energy, energy efficient property, alternative fuels, and electric vehicles;
· Establishes new work requirements for Medicaid and expands the work requirements for SNAP and the Temporary Assistance for Needy Families (TANF) program; and
· Requires major federal rules (e.g., rules likely to result in an annual economic effect of at least $100 million) to be approved by Congress before they take effect.
Two outcomes appear certain. First, the Senate, which is controlled by Democrats, would never include this package. Second, even if they do so, President Biden will not sign it into law. All previous attempts to increase the federal debt level have been successful. Failure to do so might possibly produce some unfavorable results, such as an increase in interest rates, the onset of a recession, and delays in sending monthly checks to Social Security beneficiaries. Higher education also could be impacted adversely, e.g., the student loan repayment pause implemented because of COVID-19 could be ended immediately.