Conservative caucus offers ‘policy menu’ for debt limit negotiations

The Republican Study Committee (RSC), the largest conservative caucus in the House, released a “policy menu” of dozens of possible spending reforms and concessions as Republicans push Democrats and the Biden administration to slash spending as a condition of raising the federal debt ceiling.

The memo sent to members of the group on Wednesday, first shared with The Hill, adds more details to a framework of seven debt limit negotiation policy priorities previously endorsed by the RSC’s steering committee.

RSC Chairman Kevin Hern (R-Okla.) said that the memo is meant to showcase the already-formed proposals from members that could be used in the debt limit and budget negotiations, but noted the list is not all-inclusive.

“We’ve got a lot of things that are member-driven. We don’t have to go create new bills or new ideas when we already have a lot of members that have done a lot of heavy lifting to make this happen,” Hern said.

The debt ceiling deadline marks an “inflection point” to look at spending, Hern said. And while some of the proposals may be nonstarters for Democrats, the RSC’s goal is to get consensus among the majority of the Republican conference.

“We want to get 172 members of the RSC to support what we’re working on. And that’s our job,” Hern said.

One idea in the memo is a long-debated measure to tie the debt ceiling to a percentage of the overall economy, or set a firm “debt-to-GDP [gross domestic product]” ratio.

Another looks ahead to what to prioritize in the event of a default, like payments on interest on the debt and obligations to Social Security and Medicare recipients. The U.S. has never defaulted on its debt obligations.

The RSC suggested a new cap on discretionary spending, potentially to be instituted for the entire 10-year budget window to limit annual growth on discretionary spending. 

“Even Sen. Joe Manchin (D-WV) has advocated for limited annual discretionary spending increases to one percent nominal growth,” the memo said.

The memo did not propose any specific limits, but noted that some members have pushed for total fiscal 2024 discretionary spending to revert to fiscal 2022 levels, which would require cutting more than $100 billion from the budget.

The RSC called for reforms to boost domestic energy production, suggesting several possible bills to do so, such as the Restore Onshore Energy Production Act to immediately resume gas lease sales on eligible federal lands.

Suggested measures on taxes and regulations include requiring impact assessments for all potential regulatory actions, a commission to suggest which federal agencies and programs to consolidate or abolish, and making permanent the Trump-era tax cuts that are set to expire in 2025.

Ways to “Ensure an increase in the debt ceiling is accompanied by commensurate spending reductions” could include rescinding unused funding from three major Democratic bills passed in the last Congress, such as the American Rescue Plan, the bipartisan infrastructure bill and the Inflation Reduction Act, according to the memo.

“Waste, fraud, and abuse”-busting suggestions include reforming federal employee retirement programs and requiring agencies to frequently review the eligibility status of welfare beneficiaries.

The proposals come as House Republicans and Speaker Kevin McCarthy (R-Calif.) are pushing President Biden and Democrats for spending cuts as a condition of raising the nation’s debt limit. 

Congress will have to vote to raise the debt ceiling by an expected summer deadline — an exact date for when the Treasury’s “extraordinary measures” will be exhausted is uncertain — in order to avoid severe economic consequences.

An analysis from the chief economist for Moody’s Analytics estimated in January that a debt default could lead to a loss of 6 million jobs, a loss of $12 trillion in household wealth and a rise in the unemployment rate to at least 7 percent.