Rep. Jim Banks: Debt limit would be "major leverage point" for GOP majority

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Washington — Republican Rep. Jim Banks of Indiana signaled Thursday that the GOP could use the looming debt limit as a negotiation tool with President Biden early next year should the party win back the majority in the House in November's elections.

"It's a major leverage point for the House Republican majority to use to control spending," Banks said. "We've seen the national debt now surpass $31 trillion. It is a key driver of inflation."

While some Republicans view the debt limit as a means to help rein in spending, failure to raise or suspend the debt ceiling in a timely manner could cause the U.S. to default on its debt, which would have devastating consequences for the economy.

Banks, who is widely seen as a contender to become majority whip should Republicans retake the House majority, made the remarks in an interview with CBS News chief elections correspondent Robert Costa at a Paramount Government Relations event.

"We have to use a moment like that to do things that the administration wouldn't otherwise do, the Democrats don't support," Banks said. He said spending caps, balanced budgets and cutting wasteful discretionary spending have to be on the table.

"I think Republicans are uniformly in support of using that moment as an opportunity to do something about spending," he added.

The national debt has surpassed $31 trillion, according to a Treasury report released early this month, nearing the roughly $31.4 trillion debt limit. At the same time, the U.S. is grappling with 40-year-high inflation and rising interest rates which will make the country's debt more costly.

Rep. Jim Banks, R-Ind., is interviewed by CBS News chief Election & Campaign correspondent Robert Costa, Oct. 20, 2022, Washington, D.C. / Credit: CRAIG HUDSON / CBS News
Rep. Jim Banks, R-Ind., is interviewed by CBS News chief Election & Campaign correspondent Robert Costa, Oct. 20, 2022, Washington, D.C. / Credit: CRAIG HUDSON / CBS News

The current limit is expected to cover borrowing into early next year, but the exact date the U.S. government would run out of money to pay its bills — the so-called "X date" — is not yet clear.

"I don't know why we can't come together to address spending issues, and the debt limit is a serious time to bring us together, both parties, the White House and the Congress to find solutions," Banks said.

Less than a year ago, Congress raised the debt limit by $2.5 trillion in a party-line vote after months of negotiating. Treasury Secretary Janet Yellen warned at the time that going into default would be catastrophic for the U.S. economy.

Even when Congress has been able to ultimately reach a deal, the threat of a default has consequences. In 2011, S&P downgraded the U.S. government credit rating to AA+. It was the first time the U.S. was given a rating below AAA. The downgrade came just days after the Republican controlled Congress raised the debt limit.

During Thursday's conversation, Banks also left the door open for impeachment proceedings against Biden administration officials should Republicans retake the House. Banks said there would be a "vigorous oversight agenda."

"If those investigations and oversight initiatives lead to other courses of action like impeaching Secretary Mayorkas, I can't predict that at this point," Banks said, referring to Homeland Security Secretary Alejandro Mayorkas.

Banks also suggested the GOP would seek to rein in financial support for Ukraine. He said he did not expect aid to be completely shut off, but noted that Americans want the government to address domestic issues before solving problems around the world.

"While America is on its knees, we can't provide blank checks to the rest of the world," Banks said. "It includes Ukraine and the rest of the world."

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