House Speaker Rep. Kevin McCarthy, R-Calif., is followed by members of the media as he walks in the U.S. Capitol on April 26.

House Speaker Rep. Kevin McCarthy, R-Calif., is followed by members of the media as he walks in the U.S. Capitol on April 26. Tasos Katopodis/Getty Images

House GOP Passes Debt Ceiling Bill That Puts Tens of Thousands of Federal Jobs At Risk

Biden vows to veto the measure that would avoid a default but is coupled with steep spending cuts.

The House on Wednesday passed a measure to avoid a debt default that would have catastrophic impacts on government operations and the U.S. economy, pairing the move with dramatic cuts to spending at non-defense federal agencies that will make the bill unpalatable to Democrats and the White House. 

The 2023 Limit, Save and Grow Act would slash discretionary spending at domestic agencies to its fiscal 2022 levels, leading to significant reductions of more than 20% in fiscal 2024. It would also cap annual spending growth to just 1% for the next decade. The bill would increase the debt ceiling by $1.5 trillion or suspend it until March 31, 2024 if the government did not hit the new limit by that time. 

The measure passed in a party-line vote after Republican leadership struggled to minimize its defections since it released the bill text last week. In the end, just four Republicans opposed it and the legislation passed in a narrow 217-215 vote. While the bill is not expected to get approval in the Senate and President Biden said he would veto it, its passage marks an attempt to ramp up pressure on the White House to commence negotiations over what the administration will concede to avoid a debt default this summer. To date, Biden and congressional Democrats have refused to negotiate and demanded a “clean” debt limit increase without conditions. 

“We want to get this done as soon as possible, but more importantly, we want President Biden to finally start getting engaged in this process,” House Majority Leader Steve Scalise, R-La., said on Wednesday. “This is not a job where you run and hide when the going gets tough.” 

The two sides remain at a standstill and have not met since Feb. 1, with the White House saying it would only negotiate over spending levels if those conversations were not tied to the debt ceiling.

In announcing its veto threat, the White House said the bill was “a reckless attempt to extract extreme concessions” from the president, but Biden would not “accept such attempts at hostage taking.” It added the bill would impose severe cuts to “education, food safety inspections, rail safety, healthy meals for seniors, research on cancer and other diseases, border security, public safety and veterans’ medical care.” Republicans have vowed to exempt spending at the departments of Defense and Veterans Affairs from the reductions, though Democrats have highlighted that the bill text itself does not provide such protections for VA. 

The measure would also avoid changes to Social Security and Medicare. The bill does include new work requirements for certain individuals receiving federal assistance. The impact of those changes was sped up late Tuesday and early Wednesday morning as leadership negotiated with conservative lawmakers who had threatened to withhold their support for the bill. The legislation would claw back unspent COVID-19 relief money and require Congress to affirmatively sign off on major rules from federal agencies. 

Last week, House Speaker Kevin McCarthy, R-Calif., said his party’s plan would “prune” the “bloated, overgrown bureaucracy.” According to the Biden administration, the legislation would accomplish just that. 

In response to inquiries from congressional Democrats, agency officials have suggested the cuts included in the Limit, Save and Grow Act would force layoffs, furloughs, hiring freezes or other means to trim workforce costs. Customs and Border Protection said, for example, it would be forced to shed 2,400 front-line agents and officers, while the Justice Department said the FBI would lose 11,000 agents. Agencies said tens of thousands of additional jobs would be lost or at risk, including 2,300 at the Food and Drug Administration, 9,400 at the Federal Aviation Administration and 3,200 at the Federal Emergency Management Agency. 

The Republican bill would also claw back much of the $80 billion the Internal Revenue Service is set to receive over the next decade as part of the Inflation Reduction Act, funding that is expected to help IRS hire tens of thousands of new employees. 

Tony Reardon, president of the National Treasury Employees Union, accused Republicans of intentionally trying to sabotage federal agencies. 

“Deep, arbitrary across-the-board spending cuts are from an old, failed playbook: Weaken federal agencies then feign outrage when the hollowed-out agencies cannot meet their missions of serving Americans,” Reardon said. “You can’t inspect more drug manufacturing facilities with fewer FDA inspectors. You can’t screen more international cargo for illicit drugs with fewer CBP officers. You can’t process more tax returns and send out refunds quickly with fewer IRS employees.” 

Rep. Jody Arrington, R-Texas, who chairs the House Budget Committee and introduced the debt ceiling bill, framed the measure as a normal course correction after some anomalous years, saying the bill would “rightsize the bureaucracy coming out of COVID.” 

Senate Majority Leader Chuck Schumer, D-N.Y., said on his chamber’s floor Tuesday the bill was “dead on arrival.” He added the bill represented an "extremist, hard-right agenda" and that Democrats would not allow it to ever become law. 

“The speaker should drop the brinkmanship, drop the hostage taking, come to the table with Democrats [and] pass a clean bill to avoid default,” Schumer said. “Given where the Republican proposal is, that's the only way to go. Time is running out.” 

While economists and lawmakers have speculated about a range of outcomes if an unprecedented default were to occur, most have agreed the most likely scenario would require the Treasury Department to delay all government payments until it had enough money available to meet the demands of a given day. That would require federal employees to either face furloughs or work with only the promise of back pay once the situation was resolved. Agency payments to beneficiaries, states, grantees, contractors and, potentially, their own employees, would be disrupted.