“Let us take food and healthcare away from millions of American families or we’ll cause an economic collapse” might seem like an extreme political position, but it’s mainstream among House Republicans, who on Wednesday passed a bill to do just that and a whole lot more.
Dubbed the “Limit, Save, Grow Act of 2023” by House Speaker Kevin McCarthy (R-California), and the “Default on America Act” by Democrats, the proposal seeks $4.5 trillion in spending cuts over the next decade and to limit future spending on everything from food assistance for children and seniors to childcare to veterans healthcare.
Democrats are strongly opposed to the plan, but the GOP-controlled House passed the bill in a 217-215 vote on Wednesday evening. Not a single Democrat voted for the bill, while every Iowa Republican voted to pass it.
The bill is certain to fail in the Senate and President Biden has pledged to veto it, but Republicans hope they can exploit the upcoming debt ceiling negotiations to force through what they want. If they don’t get their way? They’ll let the US default on the nation’s debt, sending the country and economy into a financial crisis and possibly even a recession.
The bill is vague and does not specifically spell out which programs the cuts would come from, but McCarthy has ruled out cuts to defense spending, Social Security, and Medicare, which would force massive 22% cuts to other programs, according to a White House analysis. According to new research from Moody’s Analytics, the GOP plan would “meaningfully increase the likelihood” of a recession and cost the US 780,000 jobs by the end of 2024.
In Iowa, an estimated 132,000 people could lose access to Medicaid health insurance if the bill were to become law, according to estimates from the Center on Budget and Policy Priorities.
- 92,000 Iowans would lose access to food assistance
- 2,900 kids in Iowa would lose preschool and child care slots.
- 5,100 Iowa families would lose access to rental assistance, including older adults, those with disabilities, and families with children.
- As many as 70,000 kids with disabilities in Iowa would face reduced support.
- Iowa schools serving nearly 110,000 low-income children would lose $25 million in funding, equivalent to removing about 400 teachers and other personnel from classrooms.
- Iowa veterans would lose 77,500 outpatient doctors visits, including for issues like mental health and substance disorder treatment and suicide prevention.
- Thousands of Iowa seniors would lose access to Meals on Wheels.
Here’s what else you need to know:
What’s the Debt Ceiling?
The debt ceiling is a numerical limit, set by Congress, on how much money the federal government can borrow to pay its bills. Most years, the federal government spends more than it takes in in taxes, so it has to sell Treasury debt and use that borrowed money to cover the difference and pay the country’s bills, up to the limit set by Congress.
When the government reaches that borrowing limit, Congress can either raise the debt ceiling or vote to suspend it for a specific period of time, allowing the Treasury Department to borrow as much as it needs.
Increasing the debt ceiling is a routine congressional task and was an afterthought for decades. Congress has raised the debt ceiling 78 times since 1960—nearly once a year, because failing to raise the limit would cause the US to default on its debt, triggering a global financial crisis.
The US is set to pass the debt ceiling sometime this summer, possibly by early June.
What Happens if Congress Doesn’t Raise the Debt Ceiling?
Within a week, the US would be unable to pay many of its bills and would plunge into a recession. An extended breach of the debt ceiling would be “cataclysmic,” eliminating more than 7 million jobs, causing the stock market to plunge by more than 20%, and eliminating $10 trillion in American household wealth, according to another report from Moody’s Analytics.
“Lawmakers should put an end to the wrangling over the debt limit and increase it with no strings attached so future generations can enjoy the same benefits,” Moody’s chief economist Mark Zandi said last month.
President Biden has called on Republicans to pass a “clean” debt ceiling increase with no spending cuts, but they’ve thus far refused to heed Biden’s request
What Do Republicans Want?
Massive spending cuts to key programs that tens of millions of families rely on in exchange for raising the debt limit by $1.5 trillion or until the end of March 2024, whichever comes first.
The GOP Plan Would Kick Millions off Health Insurance and Food Assistance
Since the GOP bill is simultaneously vague and rules out cuts to defense spending, Social Security, and Medicare, countless other programs would instead see huge cuts.
For instance, the GOP plan would implement strict work requirements for many people who are covered by Medicaid health insurance and/or get benefits from the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps. Estimates suggest that these work requirements—which would go into effect in 2024—could kick between 10 million and 21 million people off Medicaid nationwide and take food assistance away from millions of Americans, including women, children, and infants.
McCarthy’s plan would require Medicaid recipients ages 19-55 to prove they work 80 hours per month, or risk losing their coverage. The bill includes some exceptions to the work requirement, including for people with dependent children, those with mental or physical disabilities, and those involved in an educational program. But the bill does not exempt postpartum women or those receiving unemployment benefits.
Exemptions to work requirements can be difficult to obtain, too. For example, McCarthy’s plan would require the roughly 10 million people with disabilities who get Medicaid to go through the hurdles of getting a determination from their healthcare provider that they are “physically or mentally unfit for employment.”
McCarthy’s proposal has drawn widespread criticism from healthcare advocates, including Frederick Isasi, executive director of FamiliesUSA.
“Make no mistake, work requirements are simply a way to cut states’ Medicaid funding and kick families off their health insurance,” Isasi said in a statement.
The bill would also force adults 18 or older who get SNAP but don’t have kids at home to document that they work 80 hours a month until they reach age 56, up from the current threshold of age 49, or risk losing benefits. McCarthy’s plan includes exemptions for pregnant women, parents, and caregivers, and those with disabilities, but again, exemptions can be difficult to obtain and many people eligible for them are likely to fall through the cracks.
Individuals in this age range who can’t fulfill the work requirements or secure an exemption are only eligible for SNAP benefits for three months over a three-year period.
Research Shows Work Requirements Don’t Work
“The truth is Medicaid work reporting requirements don’t create efficiency and don’t generate savings,” Isasi said. “Setting up a maze of confusing, bureaucratic red tape for people to verify their eligibility or work hours is bad for families, no matter if they vote red, blue or purple. No one should lose their vital health coverage because of political games.”
Additionally, research shows that most adults who get such benefits and are able to work already do work or are between jobs. Those who are out of work for longer periods of time usually have health issues, are acting as caregivers for family members, are going to school, or have other issues or responsibilities that are limiting their ability to work.
And instead of incentivizing work—at a time when unemployment is already at a 54-year-low, mind you—work requirements that threaten people’s healthcare and food benefits could actually make it more difficult for them to find or keep jobs, by taking away stable access to healthcare.
“The Speaker’s bill has it backwards: having Medicaid actually supports people’s ability to work when they can get their health conditions addressed; taking their Medicaid away will only make it harder for them to work,” said Joan Alker, executive director of the Georgetown Center for Children and Families.
As the Center on Budget and Policy Priorities has noted, work requirements are particularly likely to take coverage away from women, adults with disabilities, veterans, older Americans, people with mental health conditions or substance use issues, caregivers, and rural residents. According to the patient advocacy group Protect Our Care, the plan could also end Medicaid coverage for people when they experience pregnancy loss, stillbirth, or the death of a child, or place their child for adoption.
Mental health services could also see huge cuts, including those for substance use and prevention. Programs for pregnant and postpartum women and their babies could also lose funding and community health centers could lose the ability to provide mental health and contraceptive care to rural communities. Furthermore, programs that inspect nursing homes to prevent fraud and abuse and ensure health and safety could also face a loss of funds.
Less Help for Those in Debt, More for The Super Rich
The bill would cancel President Biden’s student loan cancellation plan which cancels up to $20,000 per borrower (and is currently awaiting a decision from the US Supreme Court). In Iowa, at least 169,000 borrowers would lose out on up to $20,000 of student loan debt cancellation.
It would also eliminate new funding for the IRS to enable the agency to pursue wealthy tax cheats, a move that would cause the deficit to increase by an estimated $120 billion—even as Republicans insist they want to reduce the deficit.
Finally, the bill would repeal several clean energy tax credit programs that were passed as part of Biden’s Inflation Reduction Act. The affected programs—which are meant to help fight climate change—-include tax credits for electric vehicles and other subsidies meant to incentivize energy-efficient construction and clean energy infrastructure projects.
Repealing these credits could eliminate tens of thousands of jobs that have been announced since the Inflation Reduction Act was passed.
While the GOP bill has no shot of securing approval from Biden or Senate Democrats, McCarthy hopes passing it out of the House will force the president to negotiate some spending cuts.
Biden has said he’s happy to speak with McCarthy, but will not budge on opposing the GOP-backed cuts or calling for a clean debt limit increase.
“Happy to meet with McCarthy,” Biden said at the end of a press conference at the White House on Wednesday. “But not on whether or not the debt limit gets extended. That’s not negotiable.”
by Keya Vakil