Some economists contend that rising debt levels will hurt growth by making it harder for businesses to borrow money; others say spiraling future costs of government borrowing could unleash rapid inflation.
Reps. Patrick McHenry , left, and Garret Graves enter the office of House Majority Leader Steve Scalise at the Capitol in Washington on Sunday, May 28, 2023.
With that pretense comes the reality that the fundamental drivers of American politics all point toward the United States borrowing more, not less. The deal included no major cuts to military spending, which is larger than base nondefense discretionary spending. Early in the talks, both parties ruled out changes to the two largest drivers of federal spending growth over the next decade: Social Security and Medicare. The cost of those programs is expected to soar within 10 years as retiring baby boomers qualify for benefits.
Negotiators for McCarthy effectively walled off the other half of the debt equation: revenue. They rebuffed Biden’s pitch to raise trillions of dollars from new taxes on corporations and high earners, and both sides wound up agreeing to cut funding for the IRS that was expected to bring in more money by cracking down on tax cheats.
Those comments reflected a lesson Democrats took from 2011, when Washington leaders last made a big show of pretending to care about debt in a bipartisan deal to raise the borrowing limit. That agreement, between President Barack Obama and Speaker John Boehner, limited discretionary spending growth for a decade, helping to drive down budget deficits for years.
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