Senate Republicans are pushing a return to fiscal austerity under President Biden, adopting a new internal party rule that requires dollar-for-dollar spending cuts in order to raise the debt ceiling.
The non-binding decision by GOP lawmakers places them on a collision course with the White House this summer as Biden seeks to pass his sweeping, multitrillion-dollar agenda, including his nearly $4 trillion Build Back Better tax and spending proposal.
"I think that is a step in the right direction in terms of reining in out-of-control spending," Sen. Ted Cruz, R-Texas, told reporters after the Wednesday meeting.
The debt ceiling – which is currently around $22 trillion – is the legal limit on the total amount of debt that the federal government can accrue. According to the Committee for a Responsible Federal Budget, it applies to both the $16.2 trillion in debt held by the public, and the $5.9 trillion owed by the government.
Congress previously agreed to suspend the limit until July 31, 2021, at which point the Treasury Department has a few months to deploy "extraordinary measures" to keep the lights on until it has no choice but to default on government obligations, including making interest payments on the national debt. Experts believe such an event could trigger an unprecedented global financial crisis.
Although Republicans embraced big budgets under former President Donald Trump – the federal debt surged by roughly $7 trillion during his tenure, thanks to the 2017 tax cuts and trillions of dollars in coronavirus relief efforts – they have signaled new support for reining in spending.
Biden and Democrats already approved a $1.9 trillion stimulus bill this year and are pushing for another $2.25 trillion spending plan that would be offset by new taxes on corporations. The debt is on track to surpass $30 trillion this year, while the deficit for the first six months of the 2021 fiscal year surged to $1.7 trillion, a record.
Sen. Rick Scott, R-Fla., is one of the GOP lawmakers urging his colleagues to support offsetting any costs in the debt ceiling with spending cuts.
"I think people agree with me. I think Republicans agree that we have too much debt and that we have to figure out how to live within our means," Scott told NBC News. "The American public is scared to death of all this debt and what's happening with inflation."