Kevin McCarthy reportedly agrees to leave cuts to Social Security and Medicare off the table in debt ceiling negotiations
Ayelet Sheffey,Juliana Kaplan
Wed, January 25, 2023
Speaker of the House Kevin McCarthy (R-CA).Chip Somodevilla/Getty Images
Kevin McCarthy agreed not to cut Social Security and Medicare in debt ceiling negotiations, Sen. Joe Manchin told reporters.
Previously, cuts to those programs were on the table as the GOP negotiated terms to raise the debt limit.
Manchin, and even former President Trump, urged the GOP to leave those programs alone.
On Wednesday, West Virginia Sen. Joe Manchin told reporters that Speaker of the House Kevin McCarthy has agreed to leave cuts to Medicare and Social Security off the table in debt ceiling negotiations.
This came after the two lawmakers met earlier today on raising the debt limit — an issue Democratic and Republican lawmakers have been clashing over recently as they negotiate how to keep the US on top of paying its bills.
A source familiar said that the meeting between Manchin and McCarthy was good, albeit with no commitments; Manchin encouraged McCarthy to negotiate and try a find path forward that would avoid harming Americans.
The US officially reached the debt limit last week, and President Joe Biden's administration has urged House Republicans to work in a bipartisan way to keep the country from defaulting on its obligations and potentially triggering a global financial crisis and recession. But Republicans have expressed their intent to use raising the debt limit as a bargaining chip to achieve their own priorities, and previous reports indicated they were considering cutting Medicare and Social Security benefits.
However, Manchin — who has been a centrist holdout on some previous Democratic legislation — said on Sunday that he did not think Republicans should consider Medicare and Social Security in these negotiations.
"No cuts to anybody that's receiving their benefits, no adjustments to that. They've earned it. They paid into it. Take that off the table," he said. "But everyone's using that as a leverage."
Even former President Donald Trump joined the dialogue, urging Republicans in a video message last week against cutting those programs.
"Under no circumstances should Republicans vote to cut a single penny from Medicare or Social Security," Trump said in the video. "Cut waste, fraud and abuse everywhere that we can find it and there is plenty, there's plenty of it," he continued. "But do not cut the benefits our seniors worked for and paid for their entire lives. Save Social Security, don't destroy it."
McCarthy has not yet publicly commented on his discussion with Manchin, but he previously said that the reports of him considering cuts to those programs are not true.
It's still unclear what other types of cuts Republicans are considering in these negotiations. Senate Majority Leader Chuck Schumer said on the Senate floor on Monday that the GOP should reveal their intentions to the public, saying that "Republicans are talking about draconian cuts, they have an obligation to show Americans what those cuts are and let the public react. … Does that mean cuts to Social Security or Medicare or child care or Pell Grants?"
Biden is expected to meet with McCarthy regarding these negotiations, but an exact date remains unclear. Treasury Secretary Janet Yellen told House Republicans that the government has begun using "extraordinary measures" to keep the country afloat, but those measures are expected to run out at some point this summer — meaning the GOP needs to come to an agreement by then to avoid a catastrophic default.
Republicans' plans to slash Social Security and Medicare are becoming clearer: 'We have no choice but to make hard decisions'
Jason Lalljee
Wed, January 25, 2023
Reports suggest that concessions Rep. Kevin McCarthy made to secure his Speaker seat involved promoting cuts to entitlement PUBLIC GOOD programs.
Treasury takes another 'extraordinary' step on debt limit
- In this image taken from a video, Treasury Secretary Janet Yellen speaks during an interview with The Associated Press on Saturday, Jan. 21, 2023, in Dakar, Senegal. Yellen is in Zambia on the second leg of her African tour, a stop aimed at promoting American investment and ties while she's in a capital city that is visibly dominated by Chinese dollars. (AP Photo/Yesica Fisch, File)
JOSH BOAK
Tue, January 24, 2023
WASHINGTON (AP) — U.S. Treasury Secretary Janet Yellen sent a letter Tuesday to congressional leaders saying she's suspending the reinvestment of some federal bonds in a government workers' savings plan — an additional “extraordinary" measure to buy time for President Joe Biden and Congress to raise the nation's debt limit.
The government bumped up against its legal borrowing capacity last Thursday, prompting Treasury to take accounting steps regarding federal employees' retirement and health care plans that will enable the government to stay open until roughly June.
Yellen said in the letter that as of Monday she also determined that the government “will be unable to invest fully” in the government securities portion of the thrift savings fund in the federal employees' retirement system.
She noted that her predecessors have taken a similar action in the past, noting that by law the accounts “will be made whole once the debt limit is increased or suspended.”
But it's an open question to how the White House and Congress find common ground on the artificial cap imposed by Congress.
Biden and Republican House Speaker Kevin McCarthy have sharp differences over how to raise the debt ceiling, setting off the possibility of the extraordinary measures being exhausted this summer and risking a government default that could wreak economic havoc.
Senate Republican Leader Mitch McConnell has said the U.S. will not default, but it's unclear how Biden can reconcile his insistence on a clean increase with McCarthy's demand for spending cuts.
White House press secretary Karine Jean-Pierre said at Monday's news briefing that Biden is “happy to talk to anyone who wants to deal” with deficit reduction in a “responsible way.”
But Jean-Pierre said that deficit reduction should not be tied to whether the U.S. government pays its bills that are already being incurred.
“It must be done without conditions,” Jean-Pierre said, adding, “President Biden will never — will never allow Republicans to cut benefits that our hardworking Americans have earned. This is what they have earned.”
McCarthy has yet to outline the scope or the specifics of the cuts that House Republicans would like to see, although any final plan would need to pass the Democratic-controlled Senate and receive Biden's signature.
"Families and businesses have to live within a budget — Washington must as well," McCarthy tweeted on Sunday.
Ayelet Sheffey,Juliana Kaplan
Wed, January 25, 2023
Speaker of the House Kevin McCarthy (R-CA).Chip Somodevilla/Getty Images
Kevin McCarthy agreed not to cut Social Security and Medicare in debt ceiling negotiations, Sen. Joe Manchin told reporters.
Previously, cuts to those programs were on the table as the GOP negotiated terms to raise the debt limit.
Manchin, and even former President Trump, urged the GOP to leave those programs alone.
On Wednesday, West Virginia Sen. Joe Manchin told reporters that Speaker of the House Kevin McCarthy has agreed to leave cuts to Medicare and Social Security off the table in debt ceiling negotiations.
This came after the two lawmakers met earlier today on raising the debt limit — an issue Democratic and Republican lawmakers have been clashing over recently as they negotiate how to keep the US on top of paying its bills.
A source familiar said that the meeting between Manchin and McCarthy was good, albeit with no commitments; Manchin encouraged McCarthy to negotiate and try a find path forward that would avoid harming Americans.
The US officially reached the debt limit last week, and President Joe Biden's administration has urged House Republicans to work in a bipartisan way to keep the country from defaulting on its obligations and potentially triggering a global financial crisis and recession. But Republicans have expressed their intent to use raising the debt limit as a bargaining chip to achieve their own priorities, and previous reports indicated they were considering cutting Medicare and Social Security benefits.
However, Manchin — who has been a centrist holdout on some previous Democratic legislation — said on Sunday that he did not think Republicans should consider Medicare and Social Security in these negotiations.
"No cuts to anybody that's receiving their benefits, no adjustments to that. They've earned it. They paid into it. Take that off the table," he said. "But everyone's using that as a leverage."
Even former President Donald Trump joined the dialogue, urging Republicans in a video message last week against cutting those programs.
"Under no circumstances should Republicans vote to cut a single penny from Medicare or Social Security," Trump said in the video. "Cut waste, fraud and abuse everywhere that we can find it and there is plenty, there's plenty of it," he continued. "But do not cut the benefits our seniors worked for and paid for their entire lives. Save Social Security, don't destroy it."
McCarthy has not yet publicly commented on his discussion with Manchin, but he previously said that the reports of him considering cuts to those programs are not true.
It's still unclear what other types of cuts Republicans are considering in these negotiations. Senate Majority Leader Chuck Schumer said on the Senate floor on Monday that the GOP should reveal their intentions to the public, saying that "Republicans are talking about draconian cuts, they have an obligation to show Americans what those cuts are and let the public react. … Does that mean cuts to Social Security or Medicare or child care or Pell Grants?"
Biden is expected to meet with McCarthy regarding these negotiations, but an exact date remains unclear. Treasury Secretary Janet Yellen told House Republicans that the government has begun using "extraordinary measures" to keep the country afloat, but those measures are expected to run out at some point this summer — meaning the GOP needs to come to an agreement by then to avoid a catastrophic default.
Republicans' plans to slash Social Security and Medicare are becoming clearer: 'We have no choice but to make hard decisions'
Jason Lalljee
Wed, January 25, 2023
Reports suggest that concessions Rep. Kevin McCarthy made to secure his Speaker seat involved promoting cuts to
Kent Nishimura /Los Angeles Times via Getty Image
House Republicans have alluded to cuts they want to make to the federal budget for months.
They're becoming more explicit about those cuts involving Medicare and Social Security funds.
They've indicated that they're willing to leverage raising the debt ceiling to secure cuts. Not raising the ceiling could spell financial disaster.
After being evasive about their plans for entitlement programs like Social Security and Medicare in the months leading up to midterms, the House GOP has begun to confirm its intention to cut spending on both.
That's according to The Washington Post's Tony Romm, who reported that Republican lawmakers are willing to use the debt ceiling as a bargaining chip in order to get the Biden administration to cave on spending cuts to Medicare and Social Security. Failing to raise the debt ceiling by the summer could cause the US to default on its debt for the first time in history, the consequences of which would be dire.
"We have no choice but to make hard decisions," Rep. Kevin Hern of Oklahoma, leader of the conservative Republican Study Committee, told The Post. "Everybody has to look at everything."
The Post reported that in the past few days, a group of Republican lawmakers have pushed for House panels that would recommend changes to Social Security and Medicare.
Democrats control the Senate, and Republicans only have a slight majority in the House. But it's enough of a majority to give them power over the debt ceiling, a law restricting the amount of money the government can borrow to pay its bills.
And that's on top of the leverage that the most conservative members of the party have on the recently elected Speaker of the House, Rep. Kevin McCarthy. Conservative holdouts kept the vote for Speaker going a historically long time, and reports suggest that the concessions McCarthy made included promoting cuts to entitlement programs.
GOP leaders gave a slide presentation to Republican House members on Tuesday outlining their budget and spending priorities, CNN reported. According to a screenshot of the presentation viewed by CNN, the spending priorities were vague but mentioned reforms to "mandatory spending programs" that could include Social Security and Medicare.
Additionally, Republicans have proposed converting Medicaid and Affordable Care Act subsidies to block grants, which would cut spending by $3.6 trillion over 10 years.
"That would obviously be strongly opposed by the Senate and the White House," Edwin Park, a public policy professor at Georgetown University who focuses on health policy, told Insider, but "the holdouts were clear that they would hold raising the debt limit hostage to major spending cuts, and it is possible that smaller, damaging cuts to Medicaid could be on the table, even if the most draconian cuts are dropped."
GOP plan to leverage debt ceiling is a threat to "trigger global economic chaos"
Although Republicans have been vague about the budgetary cuts they want in recent months, it's becoming clearer that Social Security and Medicare are among their major targets, even as both programs are extremely popular among Americans.
So popular, in fact, that former President Donald Trump recently warned the GOP to keep them out of debt ceiling negotiations.
The fight to raise the debt ceiling isn't a new problem for Congress. Historically, the limit on the amount of money the government can borrow has been raised in a bipartisan fashion. But in the last decade, Republicans have begun entertaining using the debt ceiling as a bargaining chip to accomplish their own policy goals.
The White House, and Democratic lawmakers, have criticized the GOP using the debt limit to implement cuts to Medicare and Social Security.
"They claim their plan to use the debt ceiling to trigger global economic chaos is about fiscal responsibility. It's not," Massachusetts Sen. Elizabeth Warren wrote in a Boston Globe op-ed this month. "The House Republican plan for the debt ceiling is about protecting the wealthy and the well-connected from paying their fair share in taxes — nothing more and nothing less."
House Republicans have alluded to cuts they want to make to the federal budget for months.
They're becoming more explicit about those cuts involving Medicare and Social Security funds.
They've indicated that they're willing to leverage raising the debt ceiling to secure cuts. Not raising the ceiling could spell financial disaster.
After being evasive about their plans for entitlement programs like Social Security and Medicare in the months leading up to midterms, the House GOP has begun to confirm its intention to cut spending on both.
That's according to The Washington Post's Tony Romm, who reported that Republican lawmakers are willing to use the debt ceiling as a bargaining chip in order to get the Biden administration to cave on spending cuts to Medicare and Social Security. Failing to raise the debt ceiling by the summer could cause the US to default on its debt for the first time in history, the consequences of which would be dire.
"We have no choice but to make hard decisions," Rep. Kevin Hern of Oklahoma, leader of the conservative Republican Study Committee, told The Post. "Everybody has to look at everything."
The Post reported that in the past few days, a group of Republican lawmakers have pushed for House panels that would recommend changes to Social Security and Medicare.
Democrats control the Senate, and Republicans only have a slight majority in the House. But it's enough of a majority to give them power over the debt ceiling, a law restricting the amount of money the government can borrow to pay its bills.
And that's on top of the leverage that the most conservative members of the party have on the recently elected Speaker of the House, Rep. Kevin McCarthy. Conservative holdouts kept the vote for Speaker going a historically long time, and reports suggest that the concessions McCarthy made included promoting cuts to entitlement programs.
GOP leaders gave a slide presentation to Republican House members on Tuesday outlining their budget and spending priorities, CNN reported. According to a screenshot of the presentation viewed by CNN, the spending priorities were vague but mentioned reforms to "mandatory spending programs" that could include Social Security and Medicare.
Additionally, Republicans have proposed converting Medicaid and Affordable Care Act subsidies to block grants, which would cut spending by $3.6 trillion over 10 years.
"That would obviously be strongly opposed by the Senate and the White House," Edwin Park, a public policy professor at Georgetown University who focuses on health policy, told Insider, but "the holdouts were clear that they would hold raising the debt limit hostage to major spending cuts, and it is possible that smaller, damaging cuts to Medicaid could be on the table, even if the most draconian cuts are dropped."
GOP plan to leverage debt ceiling is a threat to "trigger global economic chaos"
Although Republicans have been vague about the budgetary cuts they want in recent months, it's becoming clearer that Social Security and Medicare are among their major targets, even as both programs are extremely popular among Americans.
So popular, in fact, that former President Donald Trump recently warned the GOP to keep them out of debt ceiling negotiations.
The fight to raise the debt ceiling isn't a new problem for Congress. Historically, the limit on the amount of money the government can borrow has been raised in a bipartisan fashion. But in the last decade, Republicans have begun entertaining using the debt ceiling as a bargaining chip to accomplish their own policy goals.
The White House, and Democratic lawmakers, have criticized the GOP using the debt limit to implement cuts to Medicare and Social Security.
"They claim their plan to use the debt ceiling to trigger global economic chaos is about fiscal responsibility. It's not," Massachusetts Sen. Elizabeth Warren wrote in a Boston Globe op-ed this month. "The House Republican plan for the debt ceiling is about protecting the wealthy and the well-connected from paying their fair share in taxes — nothing more and nothing less."
- In this image taken from a video, Treasury Secretary Janet Yellen speaks during an interview with The Associated Press on Saturday, Jan. 21, 2023, in Dakar, Senegal. Yellen is in Zambia on the second leg of her African tour, a stop aimed at promoting American investment and ties while she's in a capital city that is visibly dominated by Chinese dollars. (AP Photo/Yesica Fisch, File)
JOSH BOAK
Tue, January 24, 2023
WASHINGTON (AP) — U.S. Treasury Secretary Janet Yellen sent a letter Tuesday to congressional leaders saying she's suspending the reinvestment of some federal bonds in a government workers' savings plan — an additional “extraordinary" measure to buy time for President Joe Biden and Congress to raise the nation's debt limit.
The government bumped up against its legal borrowing capacity last Thursday, prompting Treasury to take accounting steps regarding federal employees' retirement and health care plans that will enable the government to stay open until roughly June.
Yellen said in the letter that as of Monday she also determined that the government “will be unable to invest fully” in the government securities portion of the thrift savings fund in the federal employees' retirement system.
She noted that her predecessors have taken a similar action in the past, noting that by law the accounts “will be made whole once the debt limit is increased or suspended.”
But it's an open question to how the White House and Congress find common ground on the artificial cap imposed by Congress.
Biden and Republican House Speaker Kevin McCarthy have sharp differences over how to raise the debt ceiling, setting off the possibility of the extraordinary measures being exhausted this summer and risking a government default that could wreak economic havoc.
Senate Republican Leader Mitch McConnell has said the U.S. will not default, but it's unclear how Biden can reconcile his insistence on a clean increase with McCarthy's demand for spending cuts.
White House press secretary Karine Jean-Pierre said at Monday's news briefing that Biden is “happy to talk to anyone who wants to deal” with deficit reduction in a “responsible way.”
But Jean-Pierre said that deficit reduction should not be tied to whether the U.S. government pays its bills that are already being incurred.
“It must be done without conditions,” Jean-Pierre said, adding, “President Biden will never — will never allow Republicans to cut benefits that our hardworking Americans have earned. This is what they have earned.”
McCarthy has yet to outline the scope or the specifics of the cuts that House Republicans would like to see, although any final plan would need to pass the Democratic-controlled Senate and receive Biden's signature.
"Families and businesses have to live within a budget — Washington must as well," McCarthy tweeted on Sunday.
Debit Limit Ceiling Crisis Could Hit Your 401(k), Social Security and Medicare
Ashlyn Brooks
Tue, January 24, 2023
americas-debt-ceilin-crisis-SmartAsset
America's debt ceiling was reached - again - on January 19, 2023 as the country exceeded its $31.4 trillion spending cap. The cap was raised to that amount in December 2021. As much terms like "ceiling" and "cap" are used in this discussion, the truth is this limitation is more of a temporary hindrance than a cut-off - the cap has been raised 78 times since 1960.
While this may seem like a topic outside of your realm of concerns, the longstanding effects of not having this ceiling raised again have a strong potential to bleed over into your personal finances - namely your 401(k), Social security and Medicare.
What Is America's Debt Ceiling?
The national debt ceiling is the legal limit on the amount of debt that the U.S. government can incur. This limit is set by Congress and is intended to ensure that the government does not spend more money than it takes in. However, when the government reaches the debt ceiling, it can no longer borrow money needed to run the government.
America's Debt Ceiling Crisis
Raising the debt ceiling isn't a swift single-step process, it requires a series of steps through multiple parties, and in recent years it has been contentious. The full process looks like this:
The Treasury Department forecasts when the government will reach the debt ceiling and notifies Congress.
The President submits a request to Congress to raise the debt ceiling.
The House of Representatives and the Senate hold hearings to discuss the need to raise the debt ceiling and potential alternatives.
Both chambers of Congress vote on a bill to raise the debt ceiling.
If the bill passes both chambers, it is sent to the President for signature.
If the President signs the bill, the debt ceiling is raised.
Ultimately, it's up to the president and Congress to agree on lifting the ceiling and by how much. Time is a factor, though. If negotiations carry out too long, the U.S. can default on its debt, yielding repercussions throughout the economy and government programs.
raising-americas-debt-ceiling-SmartAsset
Impact on 401(k)s
The impact on 401(k)s is a direct one since the value of a 401(k) relies on the success of the stock market. If the government is unable to raise the debt ceiling, it may default on its debt obligations, which can lead to a loss of confidence in the U.S. economy.
This, in turn, can cause the stock market to drop, leading to a decrease in the value of 401(k)s. As a result, a default on debt obligations could lead to long-term effects on 401(k)s, as investors may be less likely to invest in the stock market in the future.
Impact on Social Security and Medicare
Social Security and Medicare are also at risk if the debt ceiling is not raised. These programs are funded by the government, and if it is unable to borrow money, it may have to cut spending on these programs. This could lead to reduced benefits for recipients of Social Security and Medicare. This could have a significant impact on seniors and those who rely on these programs for their livelihood.
Keep in mind, the debt ceiling does not affect the amount of debt the government incurs; it only limits the government's ability to borrow more money to finance existing debt. The government can still spend money on programs such as Social Security and Medicare even if the debt ceiling is not raised. However, if the government is unable to borrow money to finance its existing debt, it may have to cut spending on these programs in order to meet its financial obligations.
The Bottom Line
While it benefits no one to see the U.S. default on its existing debt, the fact still stands that issues such as the debt ceiling are commonly used as political bargaining chips which only further complicates the proceedings.
The U.S. Treasury has since stepped in to institute necessary measures to buy Congress a few months to carry out negotiations. However, close calls are never settling, and, amid real implications for Americans' retirement accounts and entitlement programs, it brings up many concerns as to how dependent Americans are on government debt to supplement their retirement.
Photo credit: ©iStock/Douglas Rissing, Dilok Klaisataporn
Ashlyn Brooks
Tue, January 24, 2023
americas-debt-ceilin-crisis-SmartAsset
America's debt ceiling was reached - again - on January 19, 2023 as the country exceeded its $31.4 trillion spending cap. The cap was raised to that amount in December 2021. As much terms like "ceiling" and "cap" are used in this discussion, the truth is this limitation is more of a temporary hindrance than a cut-off - the cap has been raised 78 times since 1960.
While this may seem like a topic outside of your realm of concerns, the longstanding effects of not having this ceiling raised again have a strong potential to bleed over into your personal finances - namely your 401(k), Social security and Medicare.
What Is America's Debt Ceiling?
The national debt ceiling is the legal limit on the amount of debt that the U.S. government can incur. This limit is set by Congress and is intended to ensure that the government does not spend more money than it takes in. However, when the government reaches the debt ceiling, it can no longer borrow money needed to run the government.
America's Debt Ceiling Crisis
Raising the debt ceiling isn't a swift single-step process, it requires a series of steps through multiple parties, and in recent years it has been contentious. The full process looks like this:
The Treasury Department forecasts when the government will reach the debt ceiling and notifies Congress.
The President submits a request to Congress to raise the debt ceiling.
The House of Representatives and the Senate hold hearings to discuss the need to raise the debt ceiling and potential alternatives.
Both chambers of Congress vote on a bill to raise the debt ceiling.
If the bill passes both chambers, it is sent to the President for signature.
If the President signs the bill, the debt ceiling is raised.
Ultimately, it's up to the president and Congress to agree on lifting the ceiling and by how much. Time is a factor, though. If negotiations carry out too long, the U.S. can default on its debt, yielding repercussions throughout the economy and government programs.
raising-americas-debt-ceiling-SmartAsset
Impact on 401(k)s
The impact on 401(k)s is a direct one since the value of a 401(k) relies on the success of the stock market. If the government is unable to raise the debt ceiling, it may default on its debt obligations, which can lead to a loss of confidence in the U.S. economy.
This, in turn, can cause the stock market to drop, leading to a decrease in the value of 401(k)s. As a result, a default on debt obligations could lead to long-term effects on 401(k)s, as investors may be less likely to invest in the stock market in the future.
Impact on Social Security and Medicare
Social Security and Medicare are also at risk if the debt ceiling is not raised. These programs are funded by the government, and if it is unable to borrow money, it may have to cut spending on these programs. This could lead to reduced benefits for recipients of Social Security and Medicare. This could have a significant impact on seniors and those who rely on these programs for their livelihood.
Keep in mind, the debt ceiling does not affect the amount of debt the government incurs; it only limits the government's ability to borrow more money to finance existing debt. The government can still spend money on programs such as Social Security and Medicare even if the debt ceiling is not raised. However, if the government is unable to borrow money to finance its existing debt, it may have to cut spending on these programs in order to meet its financial obligations.
The Bottom Line
While it benefits no one to see the U.S. default on its existing debt, the fact still stands that issues such as the debt ceiling are commonly used as political bargaining chips which only further complicates the proceedings.
The U.S. Treasury has since stepped in to institute necessary measures to buy Congress a few months to carry out negotiations. However, close calls are never settling, and, amid real implications for Americans' retirement accounts and entitlement programs, it brings up many concerns as to how dependent Americans are on government debt to supplement their retirement.
Photo credit: ©iStock/Douglas Rissing, Dilok Klaisataporn
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