Freedom Caucus takes tough stance on debt ceiling, demands significant spending reform.

House Freedom Caucus Takes Hardline Position Against Debt Ceiling Increase Without Reforms

Members of the House Freedom Caucus are standing firm against an increase in the debt ceiling without meaningful reforms to the federal budget. The debt ceiling, which prevents the government from spending beyond a predetermined national debt limit of $31.4 trillion, has already been exceeded this year. Treasury Secretary Janet Yellen has warned that the government could default on obligations as early as June 1 if the debt limit is not amended soon.

Conservative Republicans Demand Fiscal Responsibility

The House Freedom Caucus, a bloc of conservative Republicans, has demanded that any increase in the debt ceiling be accompanied by a framework that returns expenditures to fiscal year 2022 levels, raises the debt ceiling only for the next year, and restricts annual spending growth to 1% over the next decade. House Speaker Kevin McCarthy recently passed the framework in the House by means of the Limit, Save, Grow Act. Without the support of the House Freedom Caucus, McCarthy is unable to pass legislation due to the narrow Republican majority.

• The House Freedom Caucus will not support any other means to raise the debt limit
• The lawmakers call on Speaker McCarthy and Senate Republicans to use every leverage and tool at their disposal to ensure the Limit, Save, Grow Act is signed into law
• Continued disagreements on the debt ceiling have made financial markets increasingly nervous as the deadline approaches

The statement from the lawmakers was released two days after McCarthy and other congressional leaders met with President Joe Biden to continue debt limit negotiations. Both parties indicated that they had made progress on the matter, with a statement from the White House characterizing the discussion as “productive and direct” and remarks from McCarthy confirming that “it is possible to get a deal by the end of the week.”

Default Would Cause Recession

A default would likely cause a recession as the federal government, a major borrower of funds that investors across the world broadly consider to be reliable, fails to repay obligations. The national debt, which now surpasses $31.7 trillion, is a source of persistent financial risk for the United States and a damper on long-term economic growth. Elevated interest rates on the national debt have recently weighed on the budget as lawmakers are forced to devote more revenues toward servicing the obligations rather than funding programs.

It is crucial that lawmakers come to an agreement on the debt ceiling before the June 1 deadline to avoid a potential financial crisis.