McCarthy unveils $1.5 trillion debt ceiling package
House Speaker Kevin McCarthy proposed a debt ceiling increase on Wednesday of $1.5 trillion — paired with a package of spending cuts.
Why it matters: If McCarthy can get Republicans to pass the plan through the House — which is far from certain — he'll have something concrete in negotiations with the White House.
In a speech on the House floor, McCarthy said the plan includes the following spending cuts:
- Setting discretionary spending at Fiscal Year 2022 levels
- Capping spending growth at 1% a year
- Pulling back unspent COVID funds
- Repealing IRS funding legislation
- House energy legislation called HR1
- Ending President Biden's student loan forgiveness
- Repealing some Inflation Reduction Act tax credits
Text of the legislation should be posted on Wednesday, McCarthy told Punchbowl News.
- A floor vote is expected next week. It would be dead on arrival in the Democratic-controlled Senate.
Between the lines: Economists are now warning the debt ceiling could come faster than expected with lower tax collections.
- The bumpy economy could force the timeline to speed up from August to as early as June.
- Back in February, the Congressional Budget Office said it expected a budget deficit of $1.4 trillion in 2023.
Behind the scenes: McCarthy's wrangling has alienated multiple members of his leadership team.
- In a speech on Wednesday, he said House Budget Chair Jodey Arrington (R-Texas) will lead the legislation.
The bottom line: 16 of the 222 House Republicans have never voted for a debt ceiling hike, Axios' Stef Kight reported in February.