Alliance for Retired Americans Friday, January 20 Alert
Nation Hits Key Debt Ceiling Deadline and Social Security and Medicare are threatened
The Biden administration and House Republicans passed an initial January 19 debt ceiling
deadline this week without a plan for resolution, ensuring a long standoff that’s likely to rattle financial markets amid worries about a recession. However, for things to move forward, Republicans need to agree among themselves on what to ask for in exchange for raising the ceiling.
The nation hit the $31.4 trillion debt limit set by Congress on Thursday, forcing the Treasury
Department to start taking extraordinary measures to keep the government paying its bills and escalating pressure on Capitol Hill to avoid a cataclysmic default. Because Thursday was not a hard deadline, the department can still use “extraordinary measures” to pay the bills for another few months.
Many ultra-conservative House Freedom Caucus members demanded that House Speaker Kevin McCarthy not raise the debt ceiling unless President Biden and Democrats agree to their demands to slash Social Security, Medicare, and other spending. In 2011, a standoff between the GOP and former President Obama over raising the debt ceiling led to a nose-dive in stock prices, spiking mortgage rates and a drop in consumer confidence.
In a speech this week, President Biden mocked Republicans for talking about “big-spendin’
Democrats,” when in fact the deficit dropped by roughly $350 billion in fiscal 2021 and more than $1 trillion in fiscal 2022 under his party’s control.
On Wednesday, Sen. Joe Manchin (WV) added to the drama when he said that he had spoken briefly with Speaker McCarthy about possible “compromise” with the House GOP. He suggested adding a bill he co-sponsored with Sen. Mitt Romney (UT) in the last Congress to create a "rescue committee” for the Social Security, Medicare and highway trust funds to legislation to raise the debt ceiling.
Sen. Romney first introduced rescue committee legislation in 2019 as a vehicle to pave the way for cuts to Social Security and Medicare by recommending changes to the Trust Funds in the name of “long-term solvency.” The TRUST Act called for the creation of committees to meet behind closed doors without public input, and for recommendations to then be fast tracked to the floor of the House and Senate for an up or down vote without amendments.
“It is time for us to fight back and defend the Social Security and Medicare benefits we’ve earned over a lifetime,” said Richard Fiesta, Executive Director of the Alliance. “This is the most serious threat to Social Security and Medicare we’ve seen in more than a decade and it will take dramatic and strong action between now and June to stop these dangerous ideas in their tracks.”