Misleading Debt Limit Deal Math Counts Phantom Savings

Romina BocciaWithin mere days of the X ‑day deadline for when the federal government would run out of wiggle room to keep borrowing under the statutory debt limit, the President’s and House Speaker McCarthy’s negotiators released theFiscal Responsibility Act (H.R.3746). Here ’s what you need to know to judge its impact on addressing the U.S. debt problem:Waives the Debt LimitThe bill suspends the debt limit until January 1, 2025.  A suspension acts like a waiver. The bill temporarily eliminates the debt limit, allowing for unlimited borrowing for about a year and a half.It ’s curious that Republicans agreed to waive the debt limit leading up to the 2024 election, when President Biden’s executive decision to cancel student loansincreased the fiscal year (FY)2023 deficit by more than $400 billion, in another pre ‐​election move. It’s less curious when considering that Republicans don’t like voting for explicit debt limit increases because it’s harder yet to be transparent about inflating the debt by another$3 –4 trillion between now and January 2025. It ’s politically easier to keep the effect on the debt open‐​ended and uncertain. Even if doing so means leaving open the possibility for more executive debt increases as well as resorting to more deficit spending should there be some emergency in the next few months, like a recession.Phantom SavingsIn exchange, the bill establishes statutory caps on discretionary funding of up to $1.590 trillio...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs