GOP Signals Plan for a Debt Limit Showdown

GOP Signals Plan for a Debt Limit Showdown

House Minority Leader Kevin McCarthy
Reuters
By Yuval Rosenberg and Michael Rainey
Tuesday, October 18, 2022

Happy Tuesday!

With three weeks to go before Election Day, President Joe Biden pledged Tuesday that if Democrats keep control of the House and expand their margin in the Senate, the first bill he’d send to the next Congress would codify abortion rights struck down in August by the Supreme Court.

The president’s speech seemed to perplex some cable news outlets, which asked repeatedly whether Biden is prioritizing the right issue given polls showing that the economy is voters’ top concern. “He’s also talking about the economy,” White House Communications Director Kate Bedingfield told MSNBC. “You’re going to hear from him this week on gas prices. Being president is about managing a lot of things all at once, and you’re going to hear from him on all of these issues.”

Here's what else we’re watching as we keep one eye on the Yankees and Guardians.

McCarthy's Plan for a Debt Limit Showdown

Republican are prepared to play with fire if they win control of the House. Minority Leader Kevin McCarthy (R-CA) confirmed in a newly published interview with Punchbowl News that the GOP will look to use the federal debt limit as leverage to force Democratic concessions on spending. The cuts could potentially involve Social Security and Medicare.

How we got here: The debt limit is the amount of money the government can borrow as it looks to pay for previously authorized spending. Under President Barack Obama, Republicans forced a series of crisis-inducing showdowns over raising the borrowing limit. Congress then raised the debt ceiling three times under President Donald Trump without much drama, even as debt rose by another $7 trillion.

Congress late last year approved a $2.5 trillion increase in the debt ceiling despite the near unanimous opposition from the GOP. Senate Republicans led by Mitch McConnell had agreed to allow Democrats to use a one-time, fast-track process to raise the limit on their own by a simple majority vote.

The borrowing limit will need to be raised again next year to prevent an unprecedented and potentially catastrophic U.S. default. But Republicans have indicated that they will refuse to raise the debt ceiling unless Democrats agree to spending cuts or other concessions regarding the president’s agenda.

In his interview with Punchbowl, McCarthy confirmed the plan.

“You can’t just continue down the path to keep spending and adding to the debt,” McCarthy said. “And if people want to make a debt ceiling [for a longer period of time], just like anything else, there comes a point in time where, okay, we’ll provide you more money, but you got to change your current behavior. We’re not just going to keep lifting your credit card limit, right? And we should seriously sit together and [figure out] where can we eliminate some waste? Where can we make the economy grow stronger?”

Asked by Punchbowl whether changes to Social Security and Medicare might be part of a debt ceiling debate, McCarthy said he wouldn’t “predetermine” anything.

Punchbowl’s Jake Sherman says that he reminded McCarthy that Republicans didn’t push a debt limit fight under Trump. “Republicans only hold the borrowing cap hostage when Democrats are in the White House,” Sherman writes. “McCarthy countered that President Joe Biden and congressional Democrats have spent too much money, in his view.”

McCarthy warns on Ukraine aid, opposed to more Covid funding: The United States has provided more than $60 billion in aid to Ukraine and its war to fend off Russia’s invasion. While the funding has come with bipartisan support, McCarthy indicated that a House Republican majority would be wary of providing more money. “I think people are gonna be sitting in a recession and they’re not going to write a blank check to Ukraine. They just won’t do it,” he told Punchbowl. “It’s not a free blank check. And then there’s the things [the Biden administration] is not doing domestically. Not doing the border and people begin to weigh that. Ukraine is important, but at the same time it can’t be the only thing they do and it can’t be a blank check.”

McCarthy reportedly also said he would oppose any new requests for Covid funding.

The bottom line: Republicans are spelling out their plans for another debt limit showdown — one that could risk a global financial crisis — and a number of GOPers have raised the prospect of changes to Social Security and Medicare. Of course, all of this depends on Republicans winning control of at least the House. Democrats could try to preempt any 2023 brinkmanship by trying to pass a debt limit increase and additional aid to Ukraine during the post-election lame duck session.

For now, though, MSNBC’s Steve Benen may be right when he writes, “The one political fight that’s likely to matter most next year is the one thing most voters are hearing very little about.”

Fitch Ratings Predicts a Recession in 2023

Fitch Ratings slashed its estimate for economic growth this year from 2.9% to 1.7%, and now predicts that the U.S. economy will fall into a mild recession by the middle of 2023.

“This reflects a lagged impact of aggressive Fed tightening, the drag on real wages from high inflation and knock-on impacts from the downturn in Europe,” the report reads, according to The Hill.

Fitch said that economic conditions will be similar to those in 1990, when the U.S. experienced a brief recession driven by high oil prices and interest rate hikes by the Federal Reserve, which was concerned about inflation. It forecasts unemployment rising to a cyclical peak of 5.4%, or 1.9% above its level as of September.

Other analysts have recently indicated that the odds of a recession are rising, with a Bloomberg Economics model now calling a downturn within one a year a 100% certainty. Goldman Sachs CEO David Solomon warned Tuesday that businesses should be “cautious” in the current environment. “I think you have to expect that there’s more volatility on the horizon now,” he told CNBC. “That doesn’t mean for sure that we have a really difficult economic scenario. But on the distribution of outcomes, there’s a good chance that we have a recession in the United States.”

1.3 Million Diabetics Rationed Their Insulin Last Year as Prices Soar: Report

Insulin prices have risen sharply over the last two decades, forcing more than a million diabetics in the U.S. to take less than they need to maintain good health, according to a study published this week in the Annals of Internal Medicine.

Based on data from the 2021 National Health Interview Survey by the Centers for Disease Control and Prevention, researchers estimate that 1.3 million Americans with diabetes — roughly 16.5% of all diabetics in the country — rationed their use of insulin last year to save money. Rationing techniques include skipping doses, taking smaller doses than prescribed and postponing the purchase of the drug.

The researchers said that high prices are the main factor in the problem — a problem that has gotten progressively worse as pharmaceutical companies raise their prices year after year. “We have allowed pharmaceutical companies to set the agenda, and that is coming at the cost to our patients,” lead author Dr. Adam Gaffney of Harvard Medical School told NBC News.

People without health insurance rationed their insulin use more than those with insurance, and those under the age of 65 rationed more than those who were older, thanks in large part to Medicare, which provides universal health insurance starting at age 65. There were significant racial differences as well, with Black diabetics more likely to ration their treatments compared to other groups.

“The main takeaway is that 1.3 million people rationed insulin in the United States, one of the richest countries in the world,” Gaffney told CNN. “This is a lifesaving drug. Rationing insulin can have life-threatening consequences.”

Partial solutions on the horizon: The Inflation Reduction Act addresses the problem by limiting insulin payments to $35 per month for Medicare recipients starting in 2023. But a provision that would have applied to those with private insurance was removed from the bill, and those without insurance still have no protection at all.

Other groups have said they intend to take steps to reduce prices. California announced last summer that it will spend $100 million to fund low-cost insulin manufacturing in the state. And the nonprofit drugmaker Civica Rx said earlier this year that it plans to sell generic insulin for $30 a vial, which is about half to a third of what most diabetics need each month.

Still, the plans fall short of simply making insulin a public good that is affordable for everyone who needs it. The best way to ensure that diabetics don’t go without insulin is to create a national health care system, Gaffney says. "I think we can realize something like that in the United States," he told NBC. "That's obviously a big project, but at the same time we need to get the prices charged by pharmaceutical companies down."

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