As the country looks to avert a potentially catastrophic default, Republicans are threatening to not raise the federal debt ceiling unless Democrats agree to cut federal spending.
But President Joe Biden and House Speaker Kevin McCarthy agree that Social Security and Medicare — which combined account for a third of federal spending alone — are off the table. And Republicans oppose cuts to Defense or veterans’ programs, which make up another 15%.
With Democrats who control the Senate unwilling to go along with broad cuts to a number of social safety programs, there’s doesn’t appear much for Congress to trim — at least not in the short run.
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What does Congress have to pay for?
Federal spending largely can be broken into two primary categories: mandatory and discretionary. The difference between the two is whether the spending is dictated by law or left to lawmakers in the annual appropriations process to decide.
Social Security and Medicare are mandatory spending programs because the government has agreed to provide recipients with a specific level of retirement or health care benefits. The government also is required to pay other costs, including debt payments and federal contracts, such as military equipment and services.
One entitlement program that Republicans have made no promises to spare is Medicaid, which provides assistance to low-income families and some seniors.
IRS? EPA? Education? What can Congress cut?
GOP leaders have not spelled out where they would cut. But what’s left after the federal government takes care of its obligations leaves Republicans little to work with, according to Marc Goldwein, senior policy director at the non-partisan Committee for Responsible Federal Budget.
Lawmakers can slash the budgets of dozens of federal agencies, such as the IRS, the Environmental Protection Agency and the Education Department, but that likely would mean laying off thousands of workers since people make up the bulk of the costs. Congress has generally shied away from doing so even when Republicans controlled both chambers.
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Even with an aggressive approach, Congress might not be able to trim no more than $50 billion through cuts to discretionary programs from the current fiscal year – roughly 1% of overall federal spending – according to Goldwein.
“I think realistically, even if you had an everything on the table approach on the spending side of the budget, there’s not that much you’re gonna save in 2023,” Goldwein said. “It takes time to implement policies … Most spending cuts can’t really be implemented that quickly and the ones that can, they already started to do so.”
The best for sustained savings would be a long-term deal that would impose spending caps and some cuts over the next decade.
What about raising taxes?
While raising revenue such as taxes and fees would help offset increased spending, Republicans have made it clear they won’t support such a move.
However, Goldwein suggests it could be possible that Republicans and Democrats agree to raise revenue, but only as part of a much broader pact.
“The best chance for agreement on revenue is if they do agree to cuts because in general Republicans are not going to say ‘well, we couldn’t cut spending so raising taxes is just as good’,” Goldwein said.
Story Credit: usatoday.com