THE US House of Representatives on Wednesday narrowly passed a bill to raise the government’s $31.4 trillion debt ceiling, while also attaching sweeping, massive spending cuts for the next decade.
The 217-215 vote was a win for Republican House Speaker Kevin McCarthy, who hopes to entice Biden into negotiations on vast spending cuts, even as the White House and Congressional Democrats insist on a debt limit increase with no strings attached.
The reality is that the US Treasury Department could run out of ways to pay its bills in a matter of weeks if Congress fails to act, and financial markets are already flashing warning signs.
‘We’ve done our job,’ a victorious McCarthy told reporters just after the vote. ‘The Republicans have raised the debt limit. You have not. Neither has Schumer,’ McCarthy added, referring to Biden and top Senate Democrat Chuck Schumer.
McCarthy called on Biden to begin negotiations on a debt limit increase and spending-cut bill and for the Senate to either approve the House bill or to pass its own.
The bill will increase Washington’s borrowing authority by $1.5 trillion or until March 31, whichever comes first, raising the spectre of another round of negotiations during the 2024 presidential campaign.
The bill would pare spending to 2022 levels, and then cap growth at 1% a year, repeal some tax incentives for renewable energy and stiffen the requirements for anti-poverty programmes.
White House Press Secretary Karine Jean-Pierre said Biden would not sign off on such cuts.
‘President Biden will never force middle class and working families to bear the burden of tax cuts for the wealthiest, as this bill does,’ she said in a statement. ‘The President has made clear this bill has no chance of becoming law.’
Schumer told reporters the House bill is ‘dead on arrival’ in the Senate, and that the Republican measure ‘only brings us dangerously closer’ to a historic US debt default that would shake markets and economies worldwide.
Democrats have condemned the deep spending cuts the measure will bring on programmes, including healthcare for the poor, Head Start education for pre-schoolers and an array of other programmes, including law enforcement and airport security operations.
Early on Wednesday morning, McCarthy had to give in to some of his members’ demands to keep the legislation alive.
The overnight changes removed a provision that would have ended a tax credit for biofuels that was part of Biden’s climate change initiatives in the 2022 Inflation Reduction Act.
US Treasury Secretary Janet Yellen says a default on debt would trigger an ‘economic catastrophe’.
Bending to the far-right wing of the party, Republicans also accelerated some new, tougher work requirements for receiving Medicaid healthcare benefits for the poor, angering Democrats.
‘Republicans’ massive tax cuts to the rich have cost taxpayers over $10 trillion over the last two decades and now they want America’s workers and families to pay the price,’ said Representative Richard Neal, the senior Democrat on the House Ways and Means Committee.
Lawmakers do not know precisely how much time they have left to act. The ‘x-date’, when the Treasury Department would no longer be able to pay all its bills, could come as early as June or stretch later into summer.
Meanwhile, the US working class is to pay the huge bill, as the biggest ever crash of the worldwide capitalist system emerges.
There is only one way out of this world crisis of capitalism for the working class of the world.
This is to build sections of the International Committee of the Fourth international world-wide to put an end to the capitalist crisis by organising the victory of the world-wide socialist revolution.
This will replace the nation states of capitalism with a world-wide Socialist Republic, where the most advanced production techniques in a planned socialist economy will guarantee a better life for all whose maxim will be ‘from each according to their ability to each according to their need’.
