House GOP and Trump: Let America Default If Republicans Can’t Force Devastating Cuts
May 11, 2023
Trump is embracing the MAGA GOP plan of forcing a catastrophic default if Republicans can’t force through devastating cuts, which could destroy millions of American jobs.
MAGA Republicans are threatening a default unless they build on Trump’s disastrous economic priorities to cut funding for health care, law enforcement, and more.
The Hill: “Speaker Kevin McCarthy’s recent proposal to strip Medicaid coverage away from people who do not meet new work-reporting requirements puts more than 10 million people in Medicaid expansion states at high risk of losing coverage.
“In Arkansas, the only state thus far to have removed Medicaid coverage for those not adhering to work-reporting requirements (before a federal court ended the program), a quarter of those subject to the rule lost coverage, despite these requirements having no impact on employment outcomes. Beyond the clear economic harm one experiences by losing coverage, this proposal also risks an increase in health care costs being passed elsewhere — namely to taxpayers and health providers.”
Reuters: “A Republican plan to cut federal spending in exchange for lifting the U.S. government’s debt ceiling would lower employment, slow economic growth and ‘meaningfully increase’ the likelihood of a recession, Moody’s Analytics’ chief economist told a Senate committee on Thursday. Mark Zandi told the Senate Budget Committee that U.S. GDP growth would be 1.61% in 2024 if the Republican plan were enacted, compared with 2.23% otherwise, and lead to 790,000 fewer jobs.
“Zandi said that passing the bill approved by the Republican-controlled House of Representatives without changes would take a heavy toll on U.S. economic growth. But he also said failure to avoid default would be ‘catastrophic,’ echoing the assessment of many other analysts and economists.”
New Republic: “Last year, Biden sought $37 billion in additional federal funding for police departments. The Republican debt ceiling bill, however, would defund the police! At both the local and federal levels. The southern border is just about all that Republicans talk about … But their debt ceiling bill would eliminate funding for 2,000 border agents! Finally, their bill would eliminate funding for more than 10,000 FBI personnel.”
This MAGA economic agenda would be a boon for the ultra-wealthy and special interests while pushing proposals that could add trillions to the debt.
Center on Budget and Policy Priorities: “House GOP’s First Bill: A Misleading Gambit to Protect Interests of Wealthy Tax Cheats”
Committee for a Responsible Federal Budget: “IRS Funding Repeal Could Cost Over $100 Billion, Encourage Tax Cheating”
Tax Policy Center: “Making The TCJA’s Individual Tax Cuts Permanent Would Add More than $3 Trillion To The Federal Debt, Mostly Benefit High-Income Households”
Trump said Republicans “have to do a default” if they don’t get massive cuts, which could cost millions of jobs and destroy trillions in household wealth.
iMoody’s: “The economic downturn that would ensue would be comparable to that suffered during the global financial crisis. That means real GDP would decline beginning late this year and through much of 2024, falling more than 4% peak to trough, costing the economy more than 7 million jobs, and pushing the unemployment rate above 8%. Stock prices would fall by almost a fifth at the worst of the selloff, wiping out $10 trillion in household wealth.”
CNN: “White House economists warned on Wednesday that a protracted debt default would cause the loss of more than 8 million jobs and cut the stock market in half. The new projections, published in a blog post by the White House Council of Economic Advisers, make clear the enormous stakes behind a potential breach of the debt ceiling.”
Let’s also not forget that Republicans voted to suspend the debt ceiling multiple times when Trump was president.
NPR: “In the past, Congress has avoided breaching the limit by simply raising it. But House Republicans said they will not support increasing the debt ceiling this time around — not unless they get spending cuts or other concessions.”
Washington Post: “GOP lawmakers during the Trump administration voted three times to suspend the debt ceiling.”
Washington Post: “Republicans were fine with the last president signing $4.7 trillion in new deficits into law even before covid-19 hit (plus, trillions more thereafter). Now that a Democrat is president, though, the GOP’s born-again deficit hawks decided that Something Must Be Done about the nation’s fiscal health. It’s not clear what Something is, however, beyond taking a valuable hostage: the nation’s debt ceiling.”