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GOP May Hold Debt Ceiling Hostage To Enact Paul Ryan’s Budget

By Igor Volsky  

"GOP May Hold Debt Ceiling Hostage To Enact Paul Ryan’s Budget"

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House Republicans will hold the national debt ceiling increase hostage until President Obama agrees to mandatory spending cuts to Social Security, Medicare, and Medicaid, the National Journal reports, and will seek to use the leverage of default to force Democrats to enact the policies in Rep. Paul Ryan’s (R-WI) budget.

Since slashing discretionary spending to historic lows — the discretionary side of the ledger has grown at a slower rate than inflation since 2007 and now makes up a smaller share of the economy than it did before the Great Recession — the GOP has shifted from demanding dollar-for-dollar immediate spending cuts and is now focusing on drafting a range of options to significantly restructure mandatory benefit programs.

The idea is to throw in the “kitchen sink” and allow Obama to pick and choose the cuts. “If what makes it easier to find the deal is to go in and pick and choose among a dozen different programs and just grab a little bit from all 12 — instead of a lot from one them — then that works just fine,” Rep. Rob Woodall (R-GA), who heads the Republican Study Committee’s budget and spending task force, told the Journal:

For a long-term deal, one that gives Treasury borrowing authority for three-and-a-half years, Obama would have to agree to premium support. The plan to privatize Medicare, perhaps the most controversial aspect of the Ryan budget, is the holy grail for conservatives who say major deficit-reduction can only be achieved by making this type of cut to mandatory spending. “If the president wants to go big, there’s a big idea,” said Rep. Steve Scalise, chairman of the Republican Study Committee.

For a medium-sized increase in the debt-limit, Republicans want Obama to agree to cut spending in the SNAP food stamp program, block-grant Medicaid, or tinker with chained CPI.

For a smaller increase, there is talk of means-testing Social Security, for example, or ending certain agricultural subsidies.

While the menu includes plenty of variables, the underlying strategic goal is to reduce mandatory spending — whatever the scope of the deal. Even at the smallest end of the spectrum — another months-long extension of debt-limit — there is talk of pushing back the eligibility age for Social Security by an equal number of months.

For 50 years, Congress routinely increased the debt ceiling as needed, including seven times under President George W. Bush. But in 2011, Republicans decided the debt ceiling was “a hostage worth ransoming. The brinksmanship caused the first-ever downgrade of the U.S. credit rating by Standard & Poor’s and cost the country a million jobs and $19 billion.

The Treasury Department has not yet said when the nation will hit its debt ceiling and has repeatedly moved back the deadline as a result of “lower spending levels and higher tax revenues.”

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