Freedom Caucus urges McCarthy to attach terms to debt ceiling agreement.

Conservative House Republicans Push for More Demands in Debt Ceiling Negotiations

As negotiators are nearing an agreement to increase the nation’s debt ceiling, conservative House Republicans have urged House Speaker Kevin McCarthy (R-Calif.) to add to their demands on President Joe Biden rather than making concessions in order to close the deal.

Negotiators from both sides have been meeting intensely for the past two weeks to forge a compromise that will forestall a first-ever default on the country’s financial obligations.

Biden’s starting position was that Congress has a constitutional duty to increase the debt ceiling so the government can fully meet its financial obligations. McCarthy said there would be no increase in the debt limit without some concession on spending, and that Republicans would not agree to any tax increases.

Biden released his draft budget on March 9. House Republicans passed the Limit, Save, Grow Act (LSGA) on April 26, which offered a $1.5 trillion increase in the debt ceiling in exchange for spending cuts and other measures.

Both leaders agreed that defaulting on the debt was not an option. Both acknowledged the need for give-and-take in order to reach a compromise acceptable to both sides.

Negotiators could reach an agreement as early as May 26, McCarthy allowed during a May 25 television interview with Fox News.

Eleventh Hour Demands

Fearing that McCarthy may be too willing to make concessions, the House Freedom Caucus (HFC) wrote to the speaker on May 25, asking him to double down on the provisions of the Limit, Save, Grow Act and add two more demands in exchange for agreeing to raise the debt limit. Those two demands are that the president accept the recently passed Secure the Border Act, and that he scrap funding for a new FBI headquarters.

If the debt limit is not raised, the government could lack the funds to pay all of its obligations in early June, possibly as early as June 1, according to Treasury Secretary Janet Yellen.

House Freedom Caucus members questioned whether Yellen’s prediction was accurate. They asked McCarthy to demand that the Treasury “immediately furnish a complete justification of the June 1 projection” along with their plan for handling payments after that date.

McCarthy has stated that he accepts Yellen’s forecast, as has Rep. Patrick McHenry (R-N.C.), chairman of the House Financial Services Committee and a lead Republican negotiator on the debt ceiling.

To extend the default deadline through the end of June, caucus members also urged the speaker to combine two money-saving provisions of the Limit, Save, Grow Act and move them through the House immediately. Those are the clawback of unspent COVID-19 relief funds and the repeal of funding for hiring of 87,000 IRS agents over the next decade.

“We passed a trillion-and-a-half-dollar debt ceiling increase for a laundry list of things that we think will actually transform the country fiscally and in terms of standing up for hardworking families,” Rep. Chip Roy (R-Texas) told reporters on May 25.

“Now what we’re talking about, allegedly, is a $3.5 [trillion] to $4 trillion debt ceiling increase for a whole lot less of those things,” Roy added. “That does not seem to me to meet what our expectations are in terms of the transformative, substantive fiscal reforms necessary to raise the debt ceiling, $4 trillion.”

• Conservative House Republicans are pushing for more demands in debt ceiling negotiations.
• The House Freedom Caucus has urged House Speaker Kevin McCarthy to add to their demands on President Joe Biden rather than making concessions in order to close the deal.
• The negotiations have been ongoing for the past two weeks to forge a compromise that will forestall a first-ever default on the country’s financial obligations.
• If the debt limit is not raised, the government could lack the funds to pay all of its obligations in early June, possibly as early as June 1, according to Treasury Secretary Janet Yellen.
• The House Freedom Caucus members have asked McCarthy to demand that the Treasury “immediately furnish a complete justification of the June 1 projection” along with their plan for handling payments after that date.

Stay tuned for updates on the debt ceiling negotiations.