With just months to go until the US government would be forced to default on its sovereign debt, President Joe Biden is using his fiscal year 2024 budget plan to lay down a marker and force Republicans to the negotiating table in an effort to break a monthlong stalemate over government spending levels and the debt limit.
Mr Biden is set to unveil his FY24 budget proposal in a speech delivered in Philadelphia on Thursday, but White House Press Secretary Karine Jean-Pierre previewed key details at Wednesday’s daily press briefing. She told reporters that the president’s budget would cut at least $3 trillion from the federal deficit — a full trillion more than what he promised to slash in last month’s State of the Union address to Congress.
“The president's budget, which we will release tomorrow, will cut the deficit by nearly $3 trillion over the next 10 years. That's nearly a $6 trillion difference between the president's budget and congressional Republicans’ agenda which would add $3 trillion to the debt,” she said.
Ms Jean-Pierre pointed to the massive corporate and individual tax cuts enacted under Mr Biden’s predecessor as an example of the GOP’s irresponsible record on budgeting, describing the Trump-era tax cuts as “a reckless and unpaid tax handout for the wealthy and large corporations which added nearly $2 trillion to the deficit”.
By contrast, she said Mr Biden’s approach to budgeting has been “responsible”.
“Thanks to his unprecedented vaccination programme and economic recovery, the deficit fell by $1.2 trillion in the first two years of the Biden-Harris administration. And the President's Inflation Reduction Act will reduce the deficit by more than $200 billion over the next decade. Building on that record of fiscal responsibility, the president budgets cuts the deficit again by nearly $3 trillion over the next decade,” she said.
“The budget achieves this while lowering costs for families investing in America and protecting programs Americans have paid into because it proposes tax reforms to ensure the wealthy and large corporations pay their fair share while cutting wasteful spending on special interest interests like big oil and Big Pharma. That's a stark contrast to congressional GOP proposals, which again, add $3 trillion to the deficit over 10 years with handouts to the rich, big corporations and special interest groups”.
Republicans have pointed to the record federal deficits and spending levels enacted over the last several years as reason to hold off on raising America’s statutory debt limit.
Many in the GOP, including former president Donald Trump, have demanded that the GOP use the possibility of a default on America’s soveriegn debt as leverage to extract concessions from the Democratic-controlled White House and Senate.
Prominent GOP figures frequently claim that raising the statutory debt limit to enable the US to continue meeting financial obligations — a practice that was once routine under presidents of both parties and met no objections when it was done under Mr Biden’s predecessor — is akin to authorising new spending.
That claim, however, is not how the debt limit works. The statutory debt limit has absolutely nothing to do with federal spending levels because federal spending levels are set each year in a series of 12 appropriations bills that must be passed by Congress and signed into law by the president.
Moreover, raising the debt limit does not increase or decrease the amount of money that is spent on programs that have already been authorised by Congress and have had funds allocated to them in appropriations legislation.
But experts say a failure to raise the debt limit would force the government to default on its debt and precipitate a worldwide financial crisis. The last time the US flirted with that disastrous outcome was 2011, when Republicans controlled the House and Democrats controlled the Senate and the White House. Mr Biden, then the vice president under Barack Obama, led the negotiations with congressional leaders that headed off a default, but not before the US had its credit rating decreased for the first time in history.
Yet despite Republicans’ insistence that spending cuts will be a necessary condition to any deal to lift the debt ceiling, they have not introduced any budgeting or spending plan of their own.
Ms Jean-Pierre said Mr Biden’s remarks on Thursday would allow him to “lay out in a transparent way to the American people how he sees us moving forward ... as it relates to the budget”.
She also called out the GOP for not coming forward with any plan of their own.
“We hear Republicans in Congress talking about how they're going to release a budget and we are calling on them to show us what's in your budget — is it going to be transparent? Is it going to be fiscally responsible?” she said, adding that the GOP has talked about cutting “incredibly important” programmes such as Social Security, Medicaid, Medicare, and Affordable Care Act subsidies that help Americans purchase health insurance.
“That's what they're saying they want to move forward with, and the President is saying: ‘You know what? I'm going to continue fighting for the American people. I'm going to continue fighting for taxpayers who have paid into this these programs since they were starting their first jobs, some of them as teenagers,’” she said. “So we're going to continue to call that out”.
