The news sure makes it sound like President Biden and Republicans have been haggling over the national debt. But that’s not what’s really happening — not at all.
President Biden wants to spend more money and run up the deficit, the story goes. Republican House Speaker Kevin McCarthy wants to rein the Democrats’ “addiction to spending” and reduce the debt.
This is wrong — enormously so — for several reasons.
First, as my Institute for Policy Studies colleague Karen Dolan has written: “If McCarthy wanted to reduce the debt, he could simply pass President Biden’s proposed budget.”
President Biden’s budget continues and modestly expands many important social services, jobs programs, and clean energy investments, Karen’s written. But because it also reverses some of President Trump’s tax cuts for corporations and the very wealthy, Biden’s budget would reduce the deficit by $3 trillion over 10 years.
Republican tax cuts for the rich have been the single largest driver of the federal deficit over the last two decades. The Bush and Trump tax cuts together are responsible for 57 percent of the increase in our ratio of debt to GDP, the Center for American Progress found — and 90 percent outside of emergency spending during the recession and pandemic.
But Republicans don’t want to raise taxes for the rich. In fact, they’re planning to introduce a bill to make those massive tax cuts for the rich permanent — at a cost of trillions. That’s a lot more debt.
The other major driver of debt? Unfunded wars and military spending.
Together with nuclear weapons, border enforcement, and so on, the IPS National Priorities Project found recently that “militarized spending” takes up nearly two-thirds of the budget Congress sets each year.
That’s a bipartisan problem — Biden’s own budget proposal unwisely hikes Pentagon spending even after the end of a 20-year war. But here again, Republicans have refused to cut any of this funding as part of their spending crackdown. In fact, they’re calling to increase it far above even Biden’s proposal.
So Republicans rejected a budget proposal that would bring down the deficit. And they rejected addressing either the high-end tax cuts or out of control military spending that drives the debt — in fact, they’re pushing for more debt in both categories.
What does that leave? The barely one-third of discretionary spending that covers education, corporate regulation, scientific research, many anti-poverty programs, and other worthwhile items.
Republicans are demanding deep cuts here that could mean more homeless veterans and hungry seniors, hundreds of thousands of Americans who can’t afford an education, tens of thousands of kids who can’t get into Head Start, more pollution, fewer green jobs, and worse besides.
And unless they get those cuts, they’ve threatened to default on America’s debt by refusing to raise the debt ceiling.
The debt ceiling doesn’t reduce the debt by one dime — it only determines whether we pay the debts we already owe. Republicans raised it three times under Trump without complaint even as he ran up one of the biggest deficits in history.
Defaulting would do nothing about the debt — but it would destroy millions of jobs, wipe out trillions of household wealth, and send interest rates skyrocketing for home, car, and credit card loans.
The current debate has nothing at all to do with debt. It’s about whether we invest in programs the American people count on — or if we kneecap those programs to fund more tax cuts for rich people and handouts to military contractors.
Let’s choose wisely.