House Speaker Kevin McCarthy Warns of National Debt Exceeding US Economy
House Speaker Kevin McCarthy recently met with President Joe Biden to discuss raising the debt ceiling. McCarthy highlighted that the nation’s debt has now exceeded the size of the entire US economy, standing at $32 trillion, almost 120% of the GDP. This means that the debt is larger than the economy by 20%. The only other time this has happened in modern history was in 1946, in the aftermath of World War II, when the US debt to GDP ratio stood at 106%, according to The Wall Street Journal.
The Limit, Save, Grow Act
McCarthy touted the House’s Limit, Save, Grow Act, which the Republican-controlled Congress passed last month. The bill suspends the nation’s debt ceiling through March 2024 or until the debt increases by $1.5 trillion, whichever comes first, in exchange for setting fiscal year 2024 discretionary federal spending at fiscal year 2022 levels. It also sets a 1% growth cap on federal spending over the next decade and includes a work requirement for some who receive welfare payments. Finally, the bill would cut regulations and encourage domestic energy production, which Biden had curtailed through executive orders, greatly limiting oil exploration on federal lands and offshore.
Economists Point to Deficit Spending as Primary Cause of High Inflation
Economists have pointed to the massive deficit spending in recent years as a primary cause of the high inflation the nation has experienced since Biden took office. Biden’s FY 2024 budget submitted to Congress in March calls for $6.8 trillion in spending. With Congress under Democratic control and with Biden in the White House, the federal government spent $6.27 trillion during FY 2022. That is up from $4.4 trillion during the Trump administration in FY 2019 prior to the pandemic and not far below the $6.6 trillion spent in FY 2020 during the height of it.
McCarthy’s Hope for a Debt Ceiling Deal
Biden expressed confidence on Wednesday before departing for the G7 summit in Japan that a debt ceiling deal could be reached in time. McCarthy is also hopeful based on how talks are going between members of his staff and the president’s. The speaker told reporters on Thursday, “We’re not there. We haven’t agreed to anything yet. But I see the path that we could come through.”
Net Favorable Rating
An Economist/YouGov poll published this week found McCarthy to be among the few top elected leaders in D.C. with a net favorable rating. Forty percent hold a favorable view of him, while 36 percent view him unfavorably. Meanwhile, Biden is underwater, with 50 percent viewing him unfavorably and 47 percent favorably. Senate Majority Leader Chuck Schumer sat at an even 40-40 split. The poll was conducted among 1,500 U.S. citizens from May 13 to 16 with a margin of error of +/- 2.8 percent.
It’s time to reevaluate how Washington is spending your money. McCarthy’s Limit, Save, Grow Act is a step in the right direction to limit spending, save money, and encourage growth. Let’s hope that a debt ceiling deal can be reached soon to prevent the nation’s debt from spiraling out of control.
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