Updated Apr 19, 2023 - Politics & Policy

McCarthy unveils $1.5 trillion debt ceiling package

Kevin McCarthy talking

Photo: Kent Nishimura / Los Angeles Times via Getty Images

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.

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