Remember the debt limit? Top Republican revives demand for spending cuts
WASHINGTON — After Republicans spent recent years raising the borrowing limit without conditions, Sen. Rick Scott is pushing the GOP to insist on dollar-for-dollar spending cuts as part of a debt ceiling increase ahead of a July 31 deadline.
The Florida senator's effort could reignite the brinkmanship fight of 2011 that brought the United States to the cusp of default, which experts said would have caused a global financial crisis.
Scott said he's unsure whether his party will go along with it.
"I'm working on it," Scott, who runs the campaign operation for Senate Republicans and has a large say in which candidates get extra funding, said. "I think people agree with me. I think Republicans agree that we have too much debt and that we have to figure out how to live within our means."
Such a move would represent a turnaround for Republicans after they supported debt limit extensions under former President Donald Trump without strings attached. Scott's push tests the appetite of Republicans to revive an aggressive brand of fiscal conservatism that reflected the party's posture under former President Barack Obama.
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"The American public is scared to death of all this debt and what's happening with inflation," said Scott.
The effort comes after Biden and congressional Democrats pushed through a $1.9 trillion Covid-19 relief bill and are now trying to drum up support for a $2 trillion package of infrastructure and jobs programs.
Wall Street is watching the debate closely.
In an April 2021 memo, Goldman Sachs urged Congress to raise the debt ceiling early to limit "political uncertainty," even though the government may have enough headroom to keep borrowing until "the final days of September or very early October."
"Some Senate Republicans are likely to use the debt limit deadline as an opportunity to highlight the recent increase in federal debt and press for fiscal restraint," said the memo from Goldman's economic research arm, which added that it was "likely a less credible threat than usual."
Sen. Ron Wyden, a Democrat and chairman of the Senate Finance Committee, said the demand was "a page from the Obama-era economic sabotage playbook, and I’m not going to let Republicans play games with the economy for their political benefit."
“The last time Republicans held the debt ceiling hostage they nearly crashed the global economy. Of course, they had no interest in holding the debt ceiling hostage when Donald Trump was president and they were showering mega-corporations and the wealthy with hundreds of billions in tax breaks," he said in response to Scott.
In 2011, the Republican-controlled House strong-armed Democrats into accepting legislation aimed at cutting spending by about $2 trillion as the price of raising the debt ceiling. But in the years after that, Obama changed his posture and refused to negotiate, and Republicans ultimately backed down.
Today, Republicans don't control either chamber of Congress. Their main leverage is the 60-vote threshold to pass most bills in the Senate, which is divided 50-50 between the parties. Scott's crusade would require at least 41 senators to oppose a "clean" debt limit extension, or one without cuts.
Alternatively, some Democratic aides believe the debt limit can be dealt with under the filibuster-proof reconciliation process as long as the hike is structured as a dollar amount and not extended to a particular date. Even so, that option is available to the Senate on a limited basis.
Scott, who first became a senator in 2019, has criticized his party as too spendthrift.
He was one of just six Republicans who voted against the bipartisan $900 billion Covid-19 aid bill in December. "Unfortunately," he wrote that month in an op-ed, "after regaining control of Congress, my party has shown an almost equal disregard for the dangers of our growing national debt and annual deficits as have the Democrats."
The debt limit is a self-imposed mechanism by Congress that restricts the ability of the U.S. government to borrow money to fulfill its obligations. Increasing it does not authorize more spending.
"Our job is to be a fiduciary for the American taxpayer. That's my job," Scott said. "And so that's what I'm going to do."