Bipartisan Caucus Proposes Plan to Avoid Default If Biden, McCarthy Fail to Reach Debt-Ceiling Deal

Rep. Brian Fitzpatrick (R-Pa.) speaks during a House Intelligence Committee hearing in Washington, on April 15, 2021. Al Drago-Pool/Getty Images

The Problem Solvers Caucus proposed a one-page, four-step framework that would solve the debt-ceiling issue if the White House and congressional leaders fail to come up with a deal.

The 63-member bipartisan congressional coalition (31 Republicans and 32 Democrats) endorsed suspending the debt limit until December 31, 2023, “to remove immediate pressure of defaulting on our national debt.” By raising the debt ceiling, lawmakers can address the federal government’s long-term fiscal health by concentrating on establishing a sustainable budget.

Caucus members say that House members can then focus on completing the fiscal year 2024 budget appropriations cycle and institute “interim deficit stabilization controls.” This would involve creating a commission comparable to the Base Realign and Closure (BRAC) Commission, a Department of Defense panel determining which military bases to shut down.

An independent fiscal commission would review and recommend a package to “stabilize long-term deficits and debt” by Dec. 31, 2024, “and must receive expedited consideration with an up or down vote in Congress by Feb. 28, 2025.”

According to the group of House moderates, the fiscal framework would also adopt budget reform recommendations. This would consist of the U.S. comptroller general issuing an annual report on the nation’s fiscal state and the president providing a midyear report on the nation’s budget.

“Once again, our Bipartisan @ProbSolveCaucus is leading the way,” Rep. Brian Fitzpatrick (R-Pa.) wrote in a tweet. “We believe in two-party solutions, and we tackle the most difficult of issues. We go there, and here we are doing it again. For the good of our nation.”

House Speaker Kevin McCarthy (R-Calif.) confirmed in an April 17 New York Stock Exchange speech that a vote would be held as early as next week on a debt ceiling bill. McCarthy noted that the legislation would limit the annual spending growth over the next 10 years to 1 percent, claw back tens of billions of dollars in COVID-related funds, and assess wasteful federal government spending.

House Speaker Kevin McCarthy (R-Calif.) delivers a speech on the econony at the New York Stock Exchange (NYSE) in New York, on April 17, 2023. Timothy A. Clary /AFP via Getty Images

“This will restore discipline to Washington. This budget will help put an end to reckless spending causing inflation,” the House Speaker said. “Before we borrow another dime, we owe it to our children to save money everywhere.”

White House deputy press secretary Andrew Bates accused McCarthy of “holding the full faith and credit of the United States hostage.”

House Minority Leader Hakeem Jeffries (D-Ny.) also slammed McCarthy’s plan, telling CNBC on April 18 that “even the flirtation with the default is going to hurt everyday Americans.”

“It risks raising car payments, it risks raising home mortgage payments, it risks raising student loan debt payments,” he said. “It will hurt everyday Americans and crash our economy at a very fragile time, particularly in the immediate aftermath of the regional banking crisis.”

For months, President Joe Biden and Democratic leaders have insisted they will not negotiate over the debt limit. Biden has also urged the GOP to present its spending budget to even consider beginning discussions.

The U.S. government reached its $31.4 trillion debt ceiling in January. The Congressional Budget Office (CBO) estimated that Washington could function without a debt-limit increase until September at the latest. However, a new forecast from Goldman Sachs analysts suggests that the deadline could be approaching faster than expected.

“At this point, we see a slightly greater chance that the deadline is in late July, but this could easily change to a base case of early June if tax receipts continue to undershoot,” the bank economists wrote in a note, adding that April receipts could bring the deadline forward.

The budget deficit surged $378 billion in March, up from the $262 billion shortfall in February. The budget deficit topped $1.1 trillion in the first half of the fiscal year 2023, caused by a 13 percent boost in federal spending and a 3 percent drop in tax revenue.