Shortly after House Speaker Kevin McCarthy announced that he had struck a deal with President Joe Biden to raise the debt ceiling, Republican leaders began circulating a fact sheet to their members listing the victories McCarthy had secured. The first bullet point captured what was supposedly the whole point of the negotiations for the GOP: The newly christened Fiscal Responsibility Act would cut spending.
An item further down the list, however, revealed far more about the agreement—and about how committed modern-day Republicans really are to their party’s small-government principles. That bullet point noted that the bill would “ensure full funding for critical veterans programs and national defense priorities, while preserving Social Security and Medicare.” At the end of a weeks-long negotiation, Republicans were bragging that they had exempted as much as half of the federal budget from the spending cuts they had fought so hard to enact. What they didn’t say was that for all of their rhetoric about reducing spending, they didn’t actually want to cut that much of it.
The Fiscal Responsibility Act, which the House approved tonight on a vote of 314-117, will avert what would have been a first-ever national default, lift the debt ceiling through the next presidential election, and save Congress from a crisis of its own making. The bill, which is expected to clear the Senate in the next several days, is hardly what Democrats would have passed had they retained their House majority last fall. But in terms of “fiscal responsibility,” the proposal does vanishingly little. “It does nothing to change the unsustainability of the federal budget,” Robert Bixby, the executive director of the Concord Coalition, a nonpartisan fiscal-watchdog organization, told me. “It’s taken off the table everything that would have an effect.”
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It’s not that Republicans lost the budgetary battle because of Biden’s tough negotiating. They didn’t even try for major spending cuts in this round of talks. McCarthy followed former President Donald Trump in abandoning the party’s long-standing push to tackle the biggest drivers of the national debt: Social Security and Medicare. Biden and the Democrats were willing to cut the Pentagon’s budget, which accounts for nearly half of all federal spending outside of entitlement programs. But the speaker nixed that idea too. “Spending cuts are very popular in the abstract, much less so in the specific,” Bixby said.
By the time McCarthy and Biden began negotiating in earnest, there wasn’t much left to cut. “You just can’t get major savings from the rest of what’s left,” Bixby told me. McCarthy was ultimately able to trim a few billion dollars from last year’s budget. That’s enough for him to claim that the Fiscal Responsibility Act cuts year-over-year spending for the first time in a decade, but in the context of the nearly $6 trillion that the federal government spent in 2022, it’s a pittance.
McCarthy succeeded in getting much of what he said he wanted, but that’s only because he didn’t ask for much. Congress will take back $28 billion in unspent COVID-relief funds, and Republicans chopped off as much as one-quarter of the $80 billion Democrats earmarked for the IRS as part of their Inflation Reduction Act last year. But the reduction in IRS funding could actually increase the deficit in the long term, because the purpose of the money was to secure higher revenue for the government by cracking down on tax fraud. The toughest provision for progressives to swallow is additional work requirements for childless adults ages 50 to 54 who receive food stamps and cash welfare. Other changes, however, will expand the food-stamp program to veterans and homeless people, and the nonpartisan Congressional Budget Office yesterday estimated that the government will end up spending more money on food stamps, not less, as a result.
The CBO projected that the bill would save $1.5 trillion over the next decade. But its estimate assumes that Congress will stick to lower spending levels for far longer than the two years that the legislation requires. The speaker has touted other reforms in the bill, such as a requirement that the administration find cuts to offset expensive new rules or regulations, and a provision that calls for an across-the-board 1 percent cut in spending if Congress fails to pass the 12 appropriations bills that fund the government each year. But neither of these is guaranteed.
The best that fiscal hawks could say for the agreement was that it temporarily halted spending growth. Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, told me that the most significant part of the deal was the “change in behavior” it represented. In recent years, she said, “lawmakers have only added to the deficit. They haven’t had any bipartisan deals that have brought the deficit down in a decade.”
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McCarthy and his allies have argued that he extracted as many concessions as he could, considering that Democrats control the White House and the Senate whereas Republicans barely have a majority in the House. As speaker, McCarthy must protect the members most vulnerable to defeat next year, and he evidently determined that demanding cuts to some of the government’s most popular programs—Social Security, Medicare, the military, and veterans—could threaten the GOP majority.
House conservatives were quick to denounce the agreement. To them, the cuts McCarthy secured were a woefully insufficient price for suspending the U.S. borrowing limit for the next year and a half. “Trillions of dollars of debt for crumbs,” Representative Scott Perry of Pennsylvania, the chair of the hardline House Freedom Caucus, told reporters yesterday. “This deal fails, fails completely.” Representative Lauren Boebert of Colorado noted that by only freezing rather than cutting spending, the legislation would “normalize” the growth of the federal government that happened during the coronavirus pandemic, even after most of the COVID-specific spending wound down.
A few conservatives accused McCarthy of betraying the commitments he made to the party when he narrowly won the speakership in January. But even the Freedom Caucus spared the Pentagon and the biggest safety-net programs in its own proposals.
Republicans have flinched on cutting spending before. Although the House GOP passed a debt-ceiling bill last month stuffed with conservative priorities, the party did not adopt a spending blueprint that would have detailed how it planned to balance the budget without raising taxes. And last week, Republicans abruptly postponed committee votes on four traditionally noncontroversial appropriations bills that contained spending cuts. GOP leaders cited the ongoing debt-limit talks as a reason, but congressional observers suspected that the party lacked the votes to advance the bills to the House floor.
The GOP’s supposed zeal for smaller government has long been inconsistent. Most Republican lawmakers were happy to support spending sprees led by Republican Presidents George W. Bush and Trump. Only when Democrats have occupied the White House has the GOP demonstrated any interest in spending restraint.
But that may be changing. In the 2011 debt-ceiling talks, Republicans forced Barack Obama to bargain over entitlement programs and accept deep cuts that applied equally to the military and domestic programs. Now the GOP is poised to hand Joe Biden a debt-ceiling increase of roughly the same duration in exchange for hardly any spending cuts at all.
The party’s hardliners fought the deal but could not stop it. They appear unlikely to try to oust McCarthy over the agreement, and Republicans might not get another opportunity to force their agenda through for the rest of Biden’s term. That they chose to fight over so little represents a huge concession of its own, an acknowledgment that despite all their denunciations of out-of-control spending, Republican leaders recognize that what the federal government funds is more popular than they like to claim.
