The second clue is the $4.5 trillion in cuts he says the bill includes. He outlined the same kind of cruel cuts he had already talked about, which a number of Republicans have already rejected. Without scoring from the Congressional Budget Office, that $4.5 trillion number is unconfirmed. But it’s big and it’s drastic.
Economists have warned that the cuts McCarthy and his team have been proposing would cause severe economic damage, even assuming that the worst didn’t happen and they didn’t let the nation go into default. The “dramatic reduction in government spending” Republicans are pushing could trigger “a recession in 2024, costing the economy 2.6 million jobs at the worst of the downturn and pushing unemployment to a peak of near 6%,” Moody’s economists have warned.
So Republicans could force an economic disaster on Biden’s watch either way if they cause a debt ceiling crash, or if they force their budget cuts through. It’s a win-win for the Republicans in their nihilistic thinking.
The statutory limit set by Congress was actually reached back in January when Treasury Secretary Janet Yellen informed Congress that the department was going to start taking “extraordinary measures” to keep making debt payments. Those measures were expected to last for anywhere from six to nine months, but they have an expiration date depending on any emergency or unexpected spending that arises and how much revenue is brought in this spring in taxes.
Potentially lower tax returns could move that deadline up into the first few weeks of June, Goldman Sachs economists warned Tuesday. “The greatest source of uncertainty regarding the deadline is April tax receipts, which we have expected to be weak as a result of reduced capital gains-related taxes,” the Goldman Sachs team said. They said that as of April 14, tax revenues were 40% lower than the same month last year. That’s a significantly larger decrease than they predicted previously, when they estimated an August deadline.
So, yes, there’s some urgency here. Which might be part of what’s behind McCarthy’s extremely optimistic goal of having the bill pass by the end of the next week with 218 Republican votes. He’s not going to find any Democrats willing to help him, and he’s already got both the Freedom Caucus and the bipartisan Problem Solvers Caucus asserting their power to withhold votes.
The second group will likely fold pretty quickly, but if the Freedom Caucus doesn’t get their way, McCarthy’s plans will fail. If the Freedom Caucus does get their way, however, he could lose the support of some of the swing-state freshmen Republicans.
Now would be a really good time for the White House to be coming up with the best way possible for Biden to use his executive authority to solve the problem.
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