Horowitz: How McCarthy debt deal will destroy our leverage for the rest of Biden’s term

News & Politics

It’s hard to put into words the depth of the betrayal by House GOP leaders this week. Not only did they offer Biden unlimited debt suspension for the remainder of his presidency for nothing meaningful in return, but this bill actually harms us in several ways. The fact that it passed with only 46 Democrat no votes, but 71 conservatives in opposition should tell you everything you need to know about McCarthy’s contention that this is the greatest spending cut of all time.

Here are several reasons why it would be better to simply pass a short-term debt limit increase of $500 billion or so, then fight for real on the appropriation bills rather than what we got yesterday. Which is why Senate conservatives should use every tactic to obstruct the deal and force tough votes on amendments.

1) So long as there is another debt deadline looming over Biden’s presidency, we can always hope to live and fight another day when his polling will be even worse and our issue demands will be too compelling to ignore. This deal takes the debt ceiling off the table for the remainder of Biden’s term. It also has the effect of taking it off the table during the presidential election when the presumptive Republican nominee can use it as a cudgel against Biden.

2) Not only does this bill override our debt ceiling leverage, but it also ruins our ability to fight on the budget bills, which are even more impactful. By setting budget caps, albeit ones with fake spending cuts, we will not have the leverage to come back and demand better in the appropriation bills. After all, how could McCarthy boast about the greatest spending cuts of all time, then come back for more in September?

You Might Like

3) This bill introduces a trigger to the appropriations process over the next two years that was designed to strengthen our leverage, but now will undermine it. If the 12 annual appropriation bills are not signed into law by January 1, a provision of this bill will trigger an automatic 1% cut to all discretionary accounts from the previous year’s spending levels.

This idea, on paper, was designed by Rep. Thomas Massie, and in its original construct, had a lot of merit. Aside from the original plan being a 2% cut, it also would have kicked in immediately on the first day of fiscal year 2024 in October. Given that the uniparty swamp would not have enough time to craft an omnibus bill by that date, it would force lawmakers to either sign on to the more conservative House appropriation bills or face an automatic cut beginning right away. This bill, however, wouldn’t implement the cut until January 1, and only does so if Congress passes a continuing resolution. McCarthy should have applied the triggered 1% cut to an omnibus and required that the 12 bills get passed individually. However, absent such a provision, this bill will actually incentivize the rushed omnibus ahead of Christmas.

This is further aggravated by the fact that spending levels under the CR trigger provision, on paper, would increase spending for non-defense accounts relative to this bill’s agreement, but decrease it for military spending. In other words, the way this bill is constructed, it works against the incentives of any version of Massie’s plan. Chris Jacobs did a good job explaining the math here. The net effect would be to incentivize the defense hawks to work toward an omnibus.

4) One of the highly touted provisions of the bill is an easement of permitting for certain energy projects. The problem is that, absent repeal of the Green New Deal (“Inflation Reduction Act”), it is actually very likely that some of these provisions will grease the skids for more green energy than for fossil fuel projects (aside from Joe Manchin’s pet pipeline). The provisions expanding “energy storage” and “high-voltage electric transmission lines” are designed to help green energy projects under the Green New Deal Act, whose repeal McCarthy never fought for from day one. The sad reality is that speeding up these projects without first dealing with the insane green energy subsidies will hasten Agenda 2030 and Net Zero.

Myron Ebell of the Competitive Enterprise Institute explains the problem with speeding up energy projects without first repealing the green scam as follows:

Besides paying higher electric bills, consumers are going to have to get used to more frequent and longer blackouts as a result of the Biden-McCarthy deal. The buildout of wind and solar installations based on federal subsidies and state mandates is already stressing the electric grid. To quote the first sentence of the National Electric Reliability Corporation’s recent press release: “NERC’s 2023 Summer Reliability Assessment warns that two-thirds of North America is at risk of energy shortfalls this summer during periods of extreme demand.”

True, the Biden-McCarthy deal does include some welcome permitting reforms that could speed up approval of some conventional as well as renewable energy projects, although nearly everyone quoted in the press has described the reforms as “modest.” The practical effects of permitting reform are not all good when combined with the subsidies. Speeding up wind and solar and other subsidized energy installations will increase federal subsidy handouts, thus increasing the federal deficit, while at the same time increasing energy costs, thus depressing overall economic output.

So, at best, this provision of the bill is a wash, not a gain we should savor in favor of a shorter-term bill with no reforms.

5) Finally, aside from the provisions of the bill, the circumstances and the messaging through which lawmakers hastily agreed to it are very concerning. Republican leaders have shown that they have not changed from the past. There is no new regime of more aggressive GOP leaders, not even in the House. They are maniacally afraid of even giving the impression that they will shoot a Democrat political hostage. This means they will never negotiate hard through a government funding deadline, a farm bill deadline, or reauthorization of any program the system deems too big to delay. Absent that sort of brinksmanship, there is quite literally never a time when we will fix anything. They will claim they need more power, but remember that with control of all three branches, they did the same thing.

Truth be told, we knew this headed into the debate over the speakership in January. As I noted at the time, every single budget bill brought to the floor when McCarthy was House majority leader passed with a greater share of Democrat than Republican votes. Yes, that was true even when they controlled all three branches. Fool me once, shame on you; fool me twice, shame on me.

Leave a Reply

Your email address will not be published. Required fields are marked *