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Biden Accuses Republicans of Undercutting Working-Class Americans

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President Biden trained his criticism on House Republicans who are threatening to shut down the federal government if their budget cuts are not enacted.President Biden challenged his Republican opponents on Thursday in their area of political strength, arguing that he has done a better job of managing the economy than former President Donald J. Trump did and accusing his predecessor’s congressional allies of undercutting working-class Americans.While Mr. Trump has long made his stewardship of the economy his most salient bragging point, Mr. Biden declared that his “Bidenomics” program had done more to help everyday Americans make a living than what he termed “MAGAnomics” ever did. He framed the argument in terms of the fall’s coming budget battles, but it also represented a preview of next year’s campaign.“They have a very different vision for America,” Mr. Biden said in a speech at Prince George’s Community College in Largo, Md., just outside the nation’s capital, where he held up a copy of budget plans by House Republicans. “Their plan, MAGAnomics, is more extreme than anything America has ever seen before.”Mr. Biden trained his criticism on Republicans who are threatening to shut down the federal government if their plans are not enacted. The president accused the Republicans of caring more about the wealthy than the working class, pointing to proposals to cut taxes for high-income households and corporations; wring savings from Social Security, Medicare and Medicaid; and reverse initiatives to lower the cost of insulin and other prescription medicine.The intensified criticism of Republicans follows months of speeches and other messaging by the president and his team promoting the benefits of Bidenomics, a phrase used by critics that they have chosen to embrace. But the credit-taking has not budged Mr. Biden’s poll numbers, and so White House officials now plan to spend the next few weeks or longer emphasizing the contrast with his opponents.“House Republicans have understandably been reluctant to tout the MAGAnomics Budget — but the White House is going to spend much of this fall doing it for them,” Anita Dunn, a senior adviser to the president, wrote in a memo released to reporters.Mr. Biden faces strong political headwinds on the economy. A new poll released on Thursday by USA Today and Suffolk University found that only 22 percent of Americans think the economy is improving while 70 percent think it is getting worse. Asked to volunteer a single word to describe the economy, a majority came up with terms like “horrible,” “terrible,” “crashing,” “shambles,” “chaotic” and “expensive.”Just 34 percent of Americans approved of Mr. Biden’s handling of the economy and, when asked to choose, more expressed faith in his predecessor to improve the country’s economic health than they did in the incumbent, 47 percent to 36 percent.Mr. Trump sought to rebut Mr. Biden even before the speech. “The public has not been fooled,” his campaign said in a statement. “They see Bidenomics for what it is: inflation, taxation, submission and failure.”“With polls confirming that Americans overwhelmingly reject Biden’s effort to whitewash his abysmal economic record,” the statement added, “he will now attempt to reverse his message 180 degrees, ludicrously trying to blame President Trump for the destruction and misery that Joe Biden himself has wrought.”Mr. Trump has always used superlatives to exaggerate the strength of the economy while he was in office. While he presided over a strong and generally healthy economy, it was not the best in history, as he has often stated, and before the pandemic it was roughly comparable in many ways to the economy of the last few years of his predecessor, President Barack Obama.During Mr. Trump’s first two years in office, the economy grew an average of 2.5 percent per quarter on an annualized basis, while it grew an average of 3.1 percent per quarter in Mr. Biden’s first two years coming out of the pandemic, according to a comparison by Barron’s. The stock market soared by 21 percent during the early part of Mr. Trump’s tenure compared with 8.5 percent during a comparable period under Mr. Biden.Unemployment has been roughly similar during the two administrations, at 3.8 percent near a record low, but job growth under Mr. Biden has far surpassed that under Mr. Trump as the economy rebounds from Covid-19 lockdowns. By last spring, monthly job growth had averaged 470,000 since Mr. Biden took office, compared with 180,000 in the start of Mr. Trump’s administration, Barron’s calculated.Where Mr. Biden has struggled most economically is with inflation, which averaged around 2 percent under Mr. Trump but peaked at 9 percent last year under Mr. Biden before falling to about 3.7 percent now. Inflation has increased the cost of groceries, clothes, household goods and housing, while eating away at rising wages. The federal deficit is also rising sharply, as have interest rates.Still, the recession many feared has yet to materialize, and many experts now are more optimistic about what they call a soft landing. Mr. Biden argues that his expansive legislative program has positioned the country for the future better than Mr. Trump ever did through new or repaired airports, roads, bridges and other infrastructure; vast investment in the semiconductor industry; ambitious clean energy programs to combat climate change; and initiatives to bring down the cost of prescription drugs.“America has the strongest economy in the world of all major economics,” Mr. Biden said. “But all they do is attack it. But you notice something? For all the time they spend attacking me and my plan, here’s what they never do — they never talk about what they want to do.” He added: “It’s like they want to keep it a secret. I don’t blame them.” More

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    Wrestling With Inequality, Some Conservatives Redraw Economic Blueprint

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    A growing number of Republican politicians and theorists are challenging party orthodoxy on pocketbook issues, corporate power and government’s role.More Republicans are coming to the view that economic inequality, or a lack of social mobility, is a problem in the United States — and that more can be done to enable families to attain or regain a middle-class life.Though discussions about inequality tend to be most visible among liberals, about four in 10 Republican or Republican-leaning adults think there is too much economic inequality in the country, according to a Pew Research survey. And among Republicans making less than about $40,000 a year who see too much economic inequality, 63 percent agree that the economic system “requires major changes” to address it.But a growing debate among conservative thinkers, politicians and the party base — online, in books and in public forums — reveals a group divided about how, in practice, to address pocketbook issues and the extent to which the government should be involved.“I don’t think just having a bigger government is a solution to a lot of these problems,” said Inez Stepman, a senior policy analyst at the Independent Women’s Forum and a fellow with the Claremont Institute, a conservative think tank widely credited with giving Trumpism an intellectual framework. “But I do think that we could stand to think a little bit more on the right about how to make that 1950s middle-class life possible for people.”These yearnings and ideological stirrings have picked up as both whites without college degrees and the broader working class have grown as a share of Republican voters. (Hillary Clinton won college-educated white voters by 17 percentage points in her 2016 race against Donald J. Trump; four years earlier, Mitt Romney, the Republican nominee, carried that group.)A notable swipe against longtime Republican economic thinking has come from Sohrab Ahmari, a conservative who served as an editorial page writer for The Wall Street Journal and the opinion editor of The New York Post. The metamorphosis of his worldview is laid out in a recently published book, “Tyranny, Inc.: How Private Power Crushed American Liberty — and What to Do About It.”“I was writing editorials preaching the gospel of low taxes, free trade, et cetera,” Mr. Ahmari said in an interview. But Mr. Trump’s election inspired him to research how “American life in general for the lower rungs of the labor market is unbelievably precarious,” he said, and his politics changed.Mr. Ahmari recently endorsed a second term for Mr. Trump, but he has written that “while ferociously conservative on cultural issues,” he is also “increasingly drawn to the economic policies of the left — figures like Senators Elizabeth Warren or Bernie Sanders.”In their own ways, Republican presidential primary candidates are jostling for ways to validate the populist energy and financial unease that Mr. Trump tapped into with a mix of pronouncements and policy promises. Some have set out economic goals that, according to many experts, are hard to square with their promises to reduce public debt and taxes and make deep cuts to government programs — especially now that many Republicans have backed away from calls to cut entitlement benefits.In a campaign speech in New Hampshire this summer called “A Declaration of Economic Independence,” Gov. Ron DeSantis of Florida, a Republican presidential contender, sharply critiqued China, diversity programming, “excessive regulation and excessive taxes” — a familiar set of modern conservative concerns. Yet he also echoed complaints and economic goals often heard from the left.“We want to be a country where you can raise a family on one sole income,” he told the crowd.“We cannot have policy that kowtows to the largest corporations and Wall Street at the expense of small businesses and average Americans,” he added. “There’s a difference between a free-market economy, which we want, and corporatism.”Critics on the left and the right argue that Mr. DeSantis has failed to clearly define how he would achieve those goals. The DeSantis campaign declined to comment for this article, but he has cited pathways to broader prosperity that include bringing industrial jobs back from abroad, increasing work force education and technical training, removing “red tape” faced by small businesses and aiming for annual U.S. economic growth of at least 3 percent.Though the fissures on the right over economic issues were evident when Mr. Trump upended the political scene eight years ago, the realignments are maturing and deepening, causing fresh tensions as factions disagree on the extent to which inequality, globalization and growing corporate power should be seen as problems.Some conservatives remain more concerned with the trajectory of federal spending and unlocking greater overall prosperity, rather than its distribution.Last year, Phil Gramm, a Republican who steered the passage of major tax cuts and deregulation during his time representing Texas in Congress from the 1970s to the early 2000s, published a book with his fellow economists Robert Ekelund and John Early called “The Myth of American Inequality.” The book — filled with alternative tabulations of impoverishment and living standards — argues that inequality is not high and rising as “the mainstream” suggests.It argues that when including welfare transfers, income inequality has been more stable than government figures suggest, and that the share of Americans living in poverty fell from 15 percent in 1967 to only 1.1 percent in 2017.“The point of the book is to get the facts straight,” Mr. Gramm said in an interview, adding that “we’re having these debates” with numbers that are “verifiably false.” (Some scholars have vehemently disagreed with the authors’ analysis.)Scott Lincicome, a vice president at the libertarian Cato Institute, said that he largely agreed with Mr. Gramm’s thesis and that Americans were mostly wrestling with “keeping up with the Joneses,” not a loss of economic traction.“In general, folks at the bottom, up to the median, are doing better,” Mr. Lincicome concluded. “They’re not winning the game, but they’re doing better than the same group was 30-plus years ago.”He added: “You know, economists can debate all day long whether we’re better off, worse off overall or whatever. But when you factor in all the factors, I personally think things are fine.”To the extent that these debates have popular reach, the most public face of the revisionist camp may be Oren Cass, an adviser to Mr. Romney’s 2012 campaign, who has become immersed in a collective project among some right-leaning thinkers to “rebuild capitalism.”Mr. Cass and his allies want to use government spending and power to promote economic mobility with traditionalist goals in mind — like reducing the cost of living for the heads of married, two-parent households.Mr. Cass praised Mr. Ahmari’s book as one that “bravely goes where few conservatives dare tread, to the ideologically fraught realm in which the market appears inherently coercive and capitalism appears in tension with economic freedom.” (Senator Marco Rubio, Republican of Florida, is talking at a book event with Mr. Ahmari this month at the National Press Club in Washington.)Many economists and political scientists contend that the ideological realignment on the right is overblown, confused with a broader, hard-to-quantify loyalty to Mr. Trump rather than an explicit ideology giving life to Trumpism.“In a way,” Mr. Ahmari said, his critics — “the people who say, ‘Yeah, sure, you’re just a couple of guys: you, Oren, and a few others at magazines and think tanks’” — are “not wrong institutionally,” as there is little donor support for their efforts.“But they are wrong in terms of voters,” he added.Ms. Stepman of the Claremont Institute says she is personally “more traditional right” than thinkers like Mr. Ahmari but agrees they are tapping into something real. “There is a very underserved part of the political spectrum that is genuinely left of center on economic issues, right of center on cultural issues,” she said, pointing to issues including immigration, gun laws, education, gender norms and more.Gabe Guidarini is one of them.Growing up in Lake Bluff, Ill., in a working-class household where MSNBC often played in the background at night, Mr. Guidarini felt his view that “the status quo in this country is corrupt” was validated by the “anti-establishment” voices of both Mr. Sanders and Mr. Trump. But he came to the view that “you can’t get away with” social views that stray from progressive orthodoxy and still be accepted by Democrats. Now, at 19, he is the president of the University of Dayton College Republicans.In 2022, he worked as a campaign intern for J.D. Vance — the author of “Hillbilly Elegy: A Memoir of a Family and Culture in Crisis,” who aligned himself with Trumpism after his 2016 book was credited for providing a “reference guide” for Mr. Trump’s electoral success. Mr. Vance, an Ohio Republican, was elected to the U.S. Senate.In line with Tucker Carlson and some other conservatives, Mr. Guidarini thinks the party “should be taking policy samples from Viktor Orban in Hungary, and what he’s doing with family policies that aim to increase family creation, increase childbirth and make it easier to live a decent life as a working or middle-class taxpayer,” he said. “That’s what’s going to return the American dream for so many people, because to young people — and I feel like a lot of other people in America today — the American dream feels dead.”Mr. Guidarini, like many on the right, is wary of achieving those goals by increasing taxes on the wealthy. But according to Pew Research, more Republican or Republican-leaning adults support raising tax rates for those with incomes over $400,000 (46 percent) than say those rates should go unchanged (29 percent) or be lowered (24 percent). And more than half of low-income Republicans support higher taxes on the highest earners.For now, though, all economic debates are “tangential,” said Saagar Enjeti, a conservative millennial who is a co-host of two podcasts that often feature competing voices across the right.“‘What are we going to do when the Trump tax cuts expire?’ These are not the fights that are happening,” Mr. Enjeti said. “I wish they were, but they’re not. They’re just not.”With consensus on policy solutions elusive and “the culture wars” in the campaign forefront, Mr. Enjeti said, Republicans will mostly rally around what he believes will be Mr. Trump’s simple economic message: “Make America 2019 Again” — a time when unemployment, inflation and mortgage rates were low and, for all of life’s challenges, at least cultural conservatives were in the White House. More

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    Biden’s Debt Ceiling Strategy: Win in the Fine Print

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    The president and his negotiators believe they worked out a deal that allowed Republicans to claim big spending cuts even as the reality was far more modest.Shalanda Young couldn’t sleep.A small team of Biden administration officials had spent the past two days in intense negotiations with House Republicans in an attempt to avert a catastrophic government default. Ms. Young, the White House budget director, had been trading proposals on federal spending caps with negotiators deputized by Speaker Kevin McCarthy, whose Republican caucus was refusing to raise the nation’s $31.4 trillion borrowing limit without deep cuts.Now, as she scrolled Netflix in search of “bad television” to distract her racing mind, Ms. Young had a sinking feeling. What if she cut a deal to reduce spending and raise the debt limit, only to see Republicans attempt to force through much deeper cuts when it came time to pass annual appropriations bills this fall?At work the next morning, Ms. Young asked her staff how to stop that from happening. They settled on a plan, which in essence would penalize Republicans’ most cherished spending programs if they failed to follow the contours of the agreement. Then they forced Republicans to include that plan in the legislative text codifying the deal.That approach reflected a broader strategy President Biden’s team followed in the debt limit negotiations, according to interviews with current and former administration officials, some Republicans and other people familiar with the talks.On Saturday, that strategy reached its conclusion as Mr. Biden signed the Fiscal Responsibility Act of 2023 into law, just days before a potential default and following weeks of talks and a revolt from right-wing lawmakers in the House that put an agreement at risk of collapse.In pursuit of an agreement, the Biden team was willing to give Republicans victory after victory on political talking points, which they realized Mr. McCarthy needed to sell the bill to his conference. They let Mr. McCarthy’s team claim in the end that the deal included deep spending cuts, huge clawbacks of unspent federal coronavirus relief money and stringent work requirements for recipients of federal aid.But in the details of the text and the many side deals that accompanied it, the Biden team wanted to win on substance. With one large exception — a $20 billion cut in enforcement funding for the Internal Revenue Service — they believe they did.The way administration officials see it, the full final agreement’s spending cuts are nothing worse than they would have expected in regular appropriations bills passed by a divided Congress. They agreed to structure the cuts so they appeared to save $1.5 trillion over a decade in the eyes of the nonpartisan Congressional Budget Office. But thanks to the side deals — including some accounting tricks — White House officials estimate that the actual cuts could total as little as $136 billion over the two enforceable years of the spending caps that are central to the agreement.Much of the $30 billion in clawed-back Covid-19 money was probably never going to be spent, Biden officials say, including dollars from an aviation manufacturing jobs program that had basically ended.At one point in the talks, administration officials offered to include in the deal more than 100 relief programs from which they were willing to rescind money. The final list spanned 20 pages of a 99-page bill, and Mr. McCarthy championed it on the House floor. But because much of the money was repurposed for other spending, the net savings added up to only about $11 billion over two years. One of the programs had a remaining balance of just $40.Many Democrats remain furious that the deal included new work requirements that could push 750,000 people off food stamps, which the Biden team begrudgingly concluded it had to accept.That measure alone could have tanked Democratic support for the deal in Congress, officials knew. So they sought to counterbalance it with efforts to expand food stamp eligibility for veterans, the homeless and others, which Republicans agreed to do. The budget office concluded that the changes would actually add recipients to the program, on net.Some Democrats and progressive groups have sharply criticized Mr. Biden for negotiating over the debt limit at all, denouncing the spending cuts and work requirements and saying he cemented Republicans’ ability to ransom the borrowing limit whenever a Democrat occupies the White House.Republican negotiators sold the deal as a game-changing blow to Mr. Biden’s spending ambitions. “They absolutely have tire tracks on them in this negotiation,” Representative Garret Graves of Louisiana said before the House vote on Wednesday.Mr. Biden views it differently. As the Senate prepared to pass the agreement on Thursday evening, he huddled with his chief of staff, Jeffrey D. Zients, along with Steve Ricchetti, counselor to the president, and other aides, in Mr. Zients’s office in the West Wing of the White House. Mr. Biden asked them what you might call a scorecard question: What percentage of Democrats in the House had voted for the deal, and what share were expected to in the Senate?When Mr. Ricchetti told him the number of Democrats would be larger, in both chambers, than the share of Republicans supporting the deal, Mr. Biden was pleased. It was validation, in his view, that he had cut a good deal.Mr. Zients referred to that vote share in an interview on Friday. “If you go back a few months ago, no one would have thought this was possible,” he said.It was not an assured outcome. The negotiating teams came to the table with divergent views of the drivers of federal debt in recent years. White House negotiators blamed Republican tax cuts. Republicans blamed Mr. Biden’s economic agenda, including a debt-financed Covid relief bill in 2021 and a bipartisan infrastructure bill later that year.The dispute occasionally grew profane. At one point, after Mr. Biden’s negotiators criticized the 2017 Republican tax cuts, a “very mild-mannered” aide to Mr. McCarthy stood up, shook his finger at the Biden team and hotly responded that their argument was nonsense, using a vulgarity, Mr. Graves recounted.Mr. Biden had insisted for months that he would not negotiate over raising the borrowing limit. But privately, many aides had been planning on talks all along — though they refused to admit those talks were linked to the debt limit. The Biden team reasoned that it would have to negotiate fiscal issues this year anyway, both on appropriations bills and on programs like food stamps that are included in a regularly reauthorized farm bill.Mr. Biden’s economic advisers, including Lael Brainard, the director of the National Economic Council, and Treasury Secretary Janet L. Yellen, were warning of catastrophic damage to the economy if the government could no longer pay its bills on time.The president appeared to score wins before the talks even started. He goaded Republicans into agreeing, in the midst of his State of the Union address, that Social Security and Medicare would be off limits in the talks — thanks to a spontaneous riff that grew out of a passage in his speech that he had worked on extensively in the days beforehand. He proposed a budget filled with tax increases on the rich and corporations that were meant to reduce debt, but he refused to engage Mr. McCarthy in serious talks until Republicans offered a spending plan of their own.In late April, the House passed a bill that included $4.7 trillion in savings from spending cuts, canceling clean-energy tax breaks and clawing back money for Covid relief and the I.R.S. It featured work requirements and measures to speed fossil fuel projects, and it raised the debt limit for one year.Mr. Biden, under fire from business groups and others who feared the standoff could result in the United States running out of money before the debt limit was raised, soon agreed to designate a team of negotiators. The White House team was led by officials including Ms. Young and one of her top aides, Michael Linden, who delayed his departure from the White House to help negotiate along with Louisa Terrell, the legislative affairs director, and Mr. Ricchetti.Mr. McCarthy’s negotiators gave Biden officials the impression that to reach agreement, they needed at least one talking point from every major aspect of the House Republican debt limit bill.The talks took a few surprising turns. Multiple White House officials say the Republican team briefly entertained relatively modest proposals to raise tax revenue, including closing loopholes that benefit some real-estate owners and people who trade cryptocurrency. Those discussions stalled quickly.Democrats agreed to fast-track a natural gas pipeline, in what officials concede was making good on a promise to Senator Joe Manchin III, Democrat of West Virginia, for backing Mr. Biden’s signature climate law last year.The spending caps ended up roughly where many Biden aides had predicted they would in private discussions months ago. But few White House officials believed they would have to give up $20 billion of the $80 billion that Democrats approved last year to help the I.R.S. crack down on tax cheats. Mr. Biden hammered out the amount in a final call with Mr. McCarthy.Ms. Young said that cut was painful. “And not just for me,” she added. “It’s something we talked to the president about many times. He cares deeply about this.”On Thursday evening in Mr. Zients’s office, the president and his team were focused on upsides. They had beaten back Republican attempts to cancel the climate law, to add new work requirements on Medicaid recipients and to impose binding spending caps for a decade. Mr. Biden was particularly pleased to spare key veterans’ programs from cuts.On Friday morning, Mr. Zients gathered core officials in his office, as he had every day, seven days a week, for several weeks running. Ms. Brainard and the economic team were relieved to have cleared the threat of default not just for this year, but through the next presidential election. Aides worked on honing Mr. Biden’s planned remarks in an Oval Office address on Friday evening.The speech started at 7:01 p.m., unusually promptly for Mr. Biden. By then, his staff was already celebrating. An hour earlier, happy hour had begun in Mr. Zients’s office.Catie Edmondson More

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    The Debt-Ceiling Deal Suggests Debt Will Keep Growing, Fast

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    The bipartisan deal to avert a government default this week featured modest cuts to a relatively small corner of the federal budget. As a curb on the growth of the nation’s $31.4 trillion debt load, it was a minor breakthrough, at best.It also showed how difficult — perhaps impossible — it could be for lawmakers to agree anytime soon on a major breakthrough to demonstrably reduce the nation’s debt load.There is no clear economic evidence that current debt levels are dragging on economic growth. 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.But Washington is back to pretending to care about debt, which is poised to top $50 trillion by the end of the decade even after accounting for newly passed spending cuts.With that pretense comes the reality that the fundamental drivers of American politics all point toward the United States borrowing more, not less.The bipartisan agreement to suspend the debt ceiling for two years, which passed the Senate on Thursday, effectively sets overall discretionary spending levels over that period. The agreement cuts federal spending by $1.5 trillion over a decade, according to the Congressional Budget Office, by essentially freezing some funding that had been projected to increase next year and then limiting spending to 1 percent growth in 2025.But even with those savings, the agreement provides clear evidence that the nation’s overall debt load will not be shrinking anytime soon.Republicans cited that mounting debt burden as a reason to refuse to raise the limit, risking default and financial crisis, unless Mr. Biden agreed to measures to reduce future deficits. But negotiators from the White House and House Republican leadership could only agree to find major savings from nondefense discretionary spending.That’s the part of the budget that funds Pell grants, federal law enforcement and a wide range of domestic programs. As a share of the economy, it is well within historical levels, and it is projected to fall in the coming years. Currently, base discretionary spending accounts for less than one-eighth of the $6.3 trillion the government spends annually.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.While Republicans at first balked when Mr. Biden accused them of wanting to cut those politically popular programs, they quickly switched to blaming the president for taking them off the table.Asked on Fox News on Wednesday why Republicans had not targeted the entire budget for cuts, Speaker Kevin McCarthy replied, “Because the president walled off all the others.”“The majority driver of the budget is mandatory spending,” he said. “It’s Medicare, Social Security, interest on the debt.”Negotiators for Mr. McCarthy effectively walled off the other half of the debt equation: revenue. They rebuffed Mr. 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 Internal Revenue Service that was expected to bring in more money by cracking down on tax cheats.Instead, Republicans attempted to frame mounting national debt as solely a spending problem, not a tax-revenue problem, even though tax cuts by both parties have added trillions to the debt since the turn of the century.Republican leaders now appear poised to introduce a new round of tax-cut proposals, which would likely be financed with borrowed money, a move Democrats decried during the floor debate over the debt-ceiling deal.“Before the ink is dry on this bill, you will be pushing for $3.5 trillion in business tax cuts,” Representative Gwen Moore, Democrat of Wisconsin, said shortly before the final vote on the Fiscal Responsibility Act, as it is called, on Wednesday.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.Many Democrats now believe those lower deficits gave Republicans the fiscal and political space they needed to pass a tax-cut package in 2017 under President Donald J. Trump that the Congressional Budget Office estimated would add nearly $2 trillion to the national debt. They have come to believe that Republicans would happily do the same again with any future budget deals — putting aside deficit concerns and effectively turning budget savings into new tax breaks.At the same time, both parties have grown more wary of cuts to Social Security and Medicare. Mr. Obama was willing to reduce future growth of retirement benefits by changing how they were tied to inflation; Mr. Biden is not. Mr. Trump won the White House after promising to protect both programs, in a break from past Republicans, and is currently slamming his rivals over possible cuts to the programs as he seeks the presidency again.All the while, the total amount of federal debt has more than doubled, to $31.4 trillion from just below $15 trillion in 2011. That growth has had no discernible effect on the performance of the economy. But it is projected to continue growing in the next decade, as retiring baby boomers draw more government benefits. The budget office estimated last month that debt held by the public would be nearly 20 percent larger in 2033, as a share of the economy, than it is today.Even under a generous score of the new agreement, which assumes Congress will effectively lock in two years of spending cuts over the full course of a decade, that growth will only fall by a few percentage points.Groups promoting debt reduction in Washington have celebrated the deal as a first step toward a larger compromise to reduce America’s reliance on borrowed money. But neither Mr. McCarthy nor Mr. Biden has shown any interest in what those groups want: a mix of significant cuts to retirement programs and increases in tax revenues.Mr. McCarthy suggested this week that he would soon form a bipartisan commission to scour the full federal budget “so we can find the waste and we can make the real decisions to really take care of this debt.”The 2011 debt deal produced a similar sort of commission, which issued recommendations on politically painful steps to reduce debt. Lawmakers discarded them. There’s no evidence they’d do anything else today. More

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    How to Enforce a Debt Deal: Through ‘Meat-Ax’ Cuts Nobody Wants

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    The debt-limit legislation includes a provision meant to force both sides to pass additional bills following through on their deal: the threat of automatic cuts if they fail to do so.The bipartisan legislation Congress passed this week to suspend the debt ceiling and impose spending caps contains an arcane but important provision aimed at forcing both sides to follow through on the deal struck by President Biden and Speaker Kevin McCarthy.The 99-page measure suspends the $31.4 trillion borrowing limit until January 2025. It cuts federal spending by $1.5 trillion over a decade, according to the Congressional Budget Office, by effectively freezing some funding that had been projected to increase next year and then limiting spending to 1 percent growth in 2025.But it also contains a number of side deals that never appear in its text but that were crucial to forging the bipartisan compromise, and that allowed both sides to claim they had gotten what they wanted out of it. To try to ensure that Congress abides by the agreement, negotiators used a time-tested technique that lawmakers have turned to for decades to enforce efforts to reduce the deficit: the threat of automatic, across-the-board spending cuts if they do not finish their work.Here’s how it works.A 1 percent cut unless spending bills are passed.Congress is supposed to pass 12 individual spending bills each year to keep the government funded. But for decades, lawmakers, unable to agree on those measures, have lumped them together into one enormous piece of legislation referred to as an “omnibus” spending bill and pushed them through against the threat of a shutdown.The debt-limit agreement imposes an automatic 1 percent cut on all spending — including on military and veterans programs, which were exempted from the caps in the compromise bill — unless all dozen bills are passed and signed into law by the end of the calendar year. Mandatory spending on programs such as Medicare and Social Security would be exempt.A wrinkle is that, because the fiscal year that drives Congress’s spending cycle ends before the calendar year does — on Sept. 30 — Congress would still need to pass a short-term bill to fund the government from October through December to avoid a shutdown.Republicans and Democrats both dread the cuts.The measure is a version of a plan offered by Representative Thomas Massie, Republican of Kentucky, a key vote to advancing the bill through the Rules Committee, who said he believed it would help avoid the Democratic-controlled Senate using the specter of a shutdown to force the House to swallow a bloated spending bill at the end of the year.“You get threatened and ransomed with a shutdown,” Mr. Massie said in an interview in late April describing the plan. “They’ll tell you, ‘If you don’t pass the Senate bill, there’s going to be a shutdown.’ I think we need to take that leverage away from anybody who would risk a shutdown to get more spending. Just take that off the table.”Some Republicans, including defense hawks, are livid about the measure, arguing that it would subject the Pentagon to irresponsible cuts. Senator Susan Collins of Maine, the top Republican on the Appropriations Committee and its defense subcommittee, called it a “harmful” provision that would leave a “threat hanging over” the Defense Department.“It would trigger an automatic, meat-ax, indiscriminate, across-the-board cut in our already inadequate defense budget and in the domestic, discretionary nondefense funding,” Ms. Collins said.Democrats, too, have a major incentive to avoid the cuts, since they have resisted reducing funding for federal programs all along.Without spending bills, major parts of the debt deal will die.Both parties stand to lose victories gained through handshake agreements during negotiations if Congress cannot pass its appropriations bills. Neither the White House nor House Republicans have published a full accounting of the agreements that do not appear in legislative text, but some have become clear.The deals allow Republicans to claim they are making deep cuts to certain spending categories while letting Democrats mitigate the pain of those cuts in the funding bills.One unwritten but agreed-upon compromise allows appropriators to repurpose $10 billion a year in 2024 and 2025 from the I.R.S. — a key priority of Republicans, who had opposed the additional enforcement funding championed by Mr. Biden and Democrats.Another side agreement, sought by Democrats, that would evaporate if the spending bills were not written designated $23 billion a year in domestic spending outside military funding as “emergency” spending, basically exempting that money from the caps in the deal.Jim Tankersley More

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    Debt Ceiling Deal Would Reinstate Student Loan Payments

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    The legislation would prevent President Biden from issuing another last-minute extension on the payments beyond the end of the summer.Follow for live updates as the House prepares for a vote on the debt limit deal.For millions of Americans with federal student loan debt, the payment holiday is about to end.Legislation to raise the debt ceiling and cut spending includes a provision that would require borrowers to begin repaying their loans again by the end of the summer after a yearslong pause imposed during the coronavirus pandemic.President Biden had already warned that the pause would end around the same time, but the legislation, if it passes in the coming days, would prevent him from issuing another last-minute extension, as he has already done several times.The end of the pause will affect millions of Americans who have taken out federal student loans to pay for college. Across the United States, 45 million people owe $1.6 trillion for such loans — more than Americans owe for any kind of consumer debt other than mortgages.The economic impact of the pandemic has faded since President Donald J. Trump first paused student loan payments in March 2020. Many Americans lost their jobs at the outset of the public health crisis, undercutting their ability to repay their loans on time. The number of jobs in the United States now exceeds prepandemic levels.Promoting the debt ceiling legislation over the weekend, Speaker Kevin McCarthy said on “Fox News Sunday” that it would end the pause on student loan payments “within 60 days of this being signed.”In fact, the legislation would follow the same timeline that the Biden administration had previously outlined, ending the pause on payments on Aug. 30 at the latest.A spokesman for Mr. McCarthy did not respond to an email seeking comment.Even with the pause ending, some borrowers may still see some relief if the Supreme Court allows Mr. Biden to move forward with a plan to forgive up to $20,000 in debt for some people with outstanding balances.Mr. Biden’s plan would cancel $10,000 of federal student loan debt for those who make under $125,000 a year. People who received Pell grants for low-income families could qualify for an additional $10,000 in debt cancellation.But the plan was challenged in court as an illegal use of executive authority, and during oral arguments in February, several justices appeared skeptical of the program. A ruling from the court could come at any time but is expected next month.White House officials have said repeatedly that they are confident in the legality of the president’s plan. But the debate about the plan, and the broader issue of student loans, has been fierce in Congress.Republicans have vowed to block the president’s plan if the courts do not. But they have so far failed to make good on that promise, despite repeated attempts.Last month, House Republicans passed a bill to raise the debt ceiling that would have blocked the student debt cancellation plan and ended the temporary pause on payments. That bill was shelved after negotiations began with the White House on the debt ceiling and spending cuts.Last week, the House passed a resolution that would use the Congressional Review Act to overturn the president’s debt cancellation plan. But the Senate has not taken up the measure, and Mr. Biden has said he would veto it.Instead, the compromise debt ceiling legislation now under consideration by lawmakers only requires ending the pause on payments — a move that the president had already said he would make. It would not block the debt cancellation plan.In addition, White House officials said the legislation would not deny the Biden administration the ability to pause student loan payments during a future emergency, as Republicans had sought to do.A spokesman for the White House said the president was pleased that Republicans had failed to block his debt cancellation plan in the debt ceiling legislation.“House Republicans weren’t able to take away a single penny of relief for the 40 million eligible borrowers, most of whom make less than $75,000 a year,” the spokesman, Abdullah Hasan, said. “The administration announced back in November that the current student loan payment pause would end this summer — this agreement makes no changes to that plan.” More

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    Yellen’s Debt Limit Warnings Went Unheeded, Leaving Her to Face Fallout

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    The Treasury secretary, who considered ways to contain the fallout of a default when she was a Fed official in 2011, had urged Democrats to raise the limit while they still had control of Congress.In the days after November’s midterm elections, Treasury Secretary Janet L. Yellen was feeling upbeat about the fact that Democrats had performed better than expected and maintained control of the Senate.But as she traveled to the Group of 20 leaders summit in Indonesia that month, she said Republicans taking control of the House posed a new threat to the U.S. economy.“I always worry about the debt ceiling,” Ms. Yellen told The New York Times in an interview on her flight from New Delhi to Bali, Indonesia, in which she urged Democrats to use their remaining time in control of Washington to lift the debt limit beyond the 2024 elections. “Any way that Congress can find to get it done, I’m all for.”Democrats did not heed Ms. Yellen’s advice. Instead, the United States has spent most of this year inching toward the brink of default as Republicans refused to raise or suspend the nation’s $31.4 trillion borrowing limit without capping spending and rolling back parts of President Biden’s agenda.Now the federal government’s cash balance has fallen below $40 billion. And on Friday, Ms. Yellen told lawmakers that the X-date — the point at which the Treasury Department runs out of enough money to pay all its bills on time — will arrive by June 5.Ms. Yellen has held her contingency plans close to the vest but signaled this week that she had been thinking about how to prepare for the worst. Speaking at a WSJ CEO Council event, the Treasury secretary laid out the difficult decisions she would face if the Treasury was forced to choose which bills to prioritize.Most market watchers expect that the Treasury Department would opt to make interest and principal payments to bondholders before paying other bills, yet Ms. Yellen would say only that she would face “very tough choices.”White House officials have refused to say if any contingency planning is underway. Early this year, Biden administration officials said they were not planning for how to prioritize payments. As the U.S. edges closer to default, the Treasury Department declined to say whether that has changed.Yet former Treasury and Federal Reserve officials said it was nearly certain that emergency plans were being devised.Christopher Campbell, who served as assistant Treasury secretary for financial institutions from 2017 to 2018, said that given the rapidly approaching X-date, “one would expect” that “there would be quiet conversations between the Treasury Department and the White House around how they would manage a technical default and perhaps prioritization of payments.”The Treasury Department has developed a default playbook from previous debt limit standoffs in 2011 and 2013. And Ms. Yellen has become quite familiar with those: During the last two significant standoffs — in 2011 and 2013 — she was a top Federal Reserve official contemplating how the central bank would try to contain fallout from a default.Ms. Yellen was briefed on the Treasury’s plans during those debates and engaged in her own contingency discussions about how to stabilize the financial system in the event that the United States could not pay all of its bills on time.According to the Fed’s transcripts, the Treasury Department did in fact plan to prioritize principal and interest payments to bondholders in the event that the X-date was breached. Although Treasury Department officials had trepidations about the idea, they had expressed to Fed officials that it could ultimately be done.Fed officials also discussed steps that they could take to stabilize money markets and to prevent failed Treasury auctions from prompting a default even if the Treasury Department was successfully paying creditors. Ms. Yellen said in both 2011 and 2013 that she was on board with plans to protect the financial system.“I expect that actions of this type might well prove unnecessary after the Treasury finally states that they do intend to pay principal and interest on time and we have finally issued our own set of policy statements,” Ms. Yellen said in 2011. “But if the stress nevertheless escalates, I’d support interventions to alleviate pressures on money market funds.”Ms. Yellen added that she was concerned about how vulnerable market infrastructure was in the event of a default and said officials should be thinking about ways to plan for a default in the future.Despite Ms. Yellen’s efforts to steer clear of the politics surrounding the debt limit, Republicans have been expressing doubts about her credibility. Haiyun Jiang/The New York Times“Given that we could face a similar situation somewhere down the road, I think it’s important for us to think about lessons learned so that we and markets will be better prepared if we face such a situation again,” Ms. Yellen said.Eric Rosengren, who was the president of the Federal Reserve Bank of Boston in 2011, said in an interview that he expected that Ms. Yellen, who is known for being rigorously prepared, was busy considering contingency plans as she did at the Fed more than a decade ago.“It would be irrational not to do some planning,” said Mr. Rosengren, adding that Ms. Yellen’s background of dealing with financial stability matters makes her well placed to be as ready as possible for the fallout of a default. “The last thing you want is to be completely unprepared and have the worst outcome.”As the debt ceiling standoff has intensified, Ms. Yellen has not been as involved in negotiations with lawmakers as her some of her predecessors.Mr. Biden tapped Shalanda Young, his budget director, and Steven J. Ricchetti, White House counselor, to lead the negotiations with House Republicans. Ms. Yellen has not attended the Oval Office meetings between Mr. Biden and Republicans.“It doesn’t look from the outside like Yellen is playing an active role in the budget negotiations,” said David Wessel, a senior economic fellow at the Brookings Institution who worked with Ms. Yellen at Brookings. “That may be that it’s not her comparative advantage, it may be that the White House wants to do it themselves, and it may be that they want to protect the credibility of Treasury predicting the X-date.”Ms. Yellen has taken a more behind the scenes role, briefing the White House on the nation’s cash reserves, calling business leaders and asking them to urge Republicans to lift the debt limit and sending increasingly regular letters to Congress warning when the federal government will be unable to pay all its bills.A White House official pointed out that Ms. Yellen has been the Biden administration’s primary messenger on the debt limit on the Sunday morning talk shows, and that she is coordinating on a daily basis with Jeffrey D. Zients, the White House chief of staff, and Lael Brainard, the director of the National Economic Council, to plot the administration’s strategy. Other officials have participated in the Oval Office meetings because the White House continues to view them as budget negotiations, the official added.The Treasury secretary also cut short a recent trip to Japan for a meeting of the Group of 7 finance ministers so she could return to Washington to deal with the debt limit.Despite Ms. Yellen’s efforts to steer clear of the politics surrounding the debt limit, Republicans have been expressing doubts about her credibility.Members of the House Freedom Caucus wrote a letter to Speaker Kevin McCarthy recently urging Republican leaders to demand that Ms. Yellen “furnish a complete justification” of her earlier projection that the U.S. could run out of cash as soon as June 1. In the letter, they accused her of “manipulative timing” and suggested that her forecasts should not be trusted because she was wrong about how hot inflation would get.The letter that Ms. Yellen sent on Friday provided a specific deadline — June 5 — and listed the upcoming payments that the federal government is required to make and explained why the Treasury Department would be unable to cover its debts beyond that date.Representative Patrick T. McHenry, a North Carolina Republican helping to lead the negotiations, said on Friday that there have been doubts about the X-date because it has been offered as a range. That, he said, is not what Americans experience when they do not have money to pay their mortgage bills on the day that they are due.“There was some skepticism of a date range — that you can pick whatever you want,” he said. “That is not how this works.”Republicans have also been targeting some of Ms. Yellen’s most prized policy priorities in the negotiations, such as rolling back some of the $80 billion that the Internal Revenue Service received as part of last year’s Inflation Reduction Act.The White House appears prepared to return $10 billion of those funds, which are intended to bolster the agency’s ability to catch tax cheats, in exchange for preserving other programs.In an interview on NBC’s Meet the Press this week, Ms. Yellen lamented that Republicans were targeting the money.“Something that greatly concerns me is that they have even been in favor of removing funding that’s been provided to the Internal Revenue Service to crack down on tax fraud,” she said.Whenever the debt limit standoff does subside, Democrats will most likely come under renewed pressure to overhaul the laws that govern the nation’s borrowing the next time they control the White House and Congress. Fearing that a fight over the debt limit would put her in the precarious position that she now faces, Ms. Yellen said in 2021 that she supported abolishing the borrowing cap.“I believe when Congress legislates expenditures and puts in place tax policy that determines taxes, those are the crucial decisions Congress is making,” Ms. Yellen said at a House Financial Services Committee hearing. “And if to finance those spending and tax decisions it is necessary to issue additional debt, I believe it is very destructive to put the president and myself, as Treasury secretary, in a situation where we might be unable to pay the bills that result from those past decisions.” More

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    White House and GOP Close In on Deal to Raise Debt Ceiling

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    The details had yet to be finalized, but negotiators were discussing a compromise that would allow Republicans to point to spending reductions and Democrats to say they had protected against large cuts.Top White House officials and Republican lawmakers were closing in Thursday on a deal that would raise the debt limit for two years while capping federal spending on everything but the military and veterans for the same period. Officials were racing to cement an agreement in time to avert a federal default that is projected in just one week.The deal taking shape would allow Republicans to say that they were reducing some federal spending — even as spending on the military and veterans’ programs would continue to grow — and allow Democrats to say they had spared most domestic programs from significant cuts.Negotiators from both sides were talking into the evening and beginning to draft legislative text, though some details remained in flux.“We’ve been talking to the White House all day, we’ve been going back and forth, and it’s not easy,” Mr. McCarthy told reporters as he left the Capitol on Thursday evening, declining to divulge what was under discussion. “It takes a while to make it happen, and we are working hard to make it happen.”The compromise, if it can be agreed upon and enacted, would raise the government’s borrowing limit for two years, past the 2024 election, according to three people familiar with it who insisted on anonymity to discuss a plan that was still being hammered out.The United States hit the legal limit, currently $31.4 trillion, in January and has been relying on accounting measures to avoid defaulting since then. The Treasury Department has projected it will exhaust its ability to pay bills on time as early as June 1.In exchange for lifting the debt limit, the deal would meet Republicans’ demand to cut some federal spending, albeit with the help of accounting maneuvers that would give both sides political cover for an agreement likely to be unpopular with large swaths of their base voters.It would impose caps on discretionary spending for two years, though those caps would apply differently to spending on the military than to nondefense discretionary spending. Spending on the military would grow next year, as would spending on some veterans’ care that falls under nondefense discretionary spending. The rest of nondefense discretionary spending would fall slightly — or roughly stay flat — compared with this year’s levels.The deal would also roll back $10 billion of the $80 billion Congress approved last year for an I.R.S. crackdown on high earners and corporations that evade taxes — funding that nonpartisan scorekeepers said would reduce the budget deficit by helping the government collect more of the tax revenue it is owed — though that provision was still under discussion. Democrats have championed the initiative, but Republicans have denounced it, claiming falsely that the money would be used to fund an army of auditors to go after working people.“The president and his negotiating team are fighting hard for his agenda, including for I.R.S. funding so it can provide better customer service to taxpayers and crack down on wealthy tax cheats,” a White House spokesman, Michael Kikukawa, said in an email on Thursday in response to a question about the provision.As the deal stood on Thursday, the I.R.S. money would essentially shift to nondefense discretionary spending, allowing Democrats to avoid further cuts in programs like education and environmental protection, according to people familiar with the pending agreement.The plan had yet to be finalized, and the bargainers continued to haggle over crucial details that could make or break any deal.“Nothing is done until you actually have a complete deal,” said Representative Patrick T. McHenry of North Carolina, one of the lead G.O.P. negotiators, who also declined to discuss the specifics of the negotiations. “Nothing’s resolved.”The cuts contained in the package were all but certain to be too modest to win the votes of hard-line fiscal conservatives in the House. Liberal groups were already complaining on Thursday about the reported deal to reduce the I.R.S. funding increase.But people familiar with the developing deal said that negotiators had agreed to fund military and veterans’ programs at the levels envisioned by President Biden in his budget for next year. They would reduce nondefense discretionary spending below this year’s levels — but much of that cut would be covered by the shift in the I.R.S. funding and other budgetary maneuvers. White House officials have contended those shifts would functionally make nondefense discretionary spending the same next year as it was this year.All discretionary spending would then grow at 1 percent in 2025, after which the caps would lift.Mr. McCarthy on Thursday had nodded to the idea that a compromise to avert a default would likely draw detractors from both parties.“I don’t think everybody is going to be happy at the end of the day,” he said. “That’s not how this system works.”Another provision of the deal seeks to avert a government shutdown later in the year, and would attempt to take away Republicans’ ability to seek deeper cuts to government programs and agencies through the appropriations process later in the year.The exact details on how such a measure would work remained unclear on Thursday evening. But it was based on a penalty of sorts, which would adjust the spending caps in the event that Congress failed to pass all 12 stand-alone spending bills that fund the government by the end of the calendar year.Negotiators were still at loggerheads over work requirements for social safety net programs and permitting reform for domestic energy and gas projects.“We have legislative work to do, policy work to do,” Mr. McHenry said. “The details of all that stuff really are consequential to us being able to get this thing through.”As negotiators inched closer to a deal, hard-right Republicans on Thursday were becoming increasingly anxious that Mr. McCarthy would sign off on a compromise they view as insufficiently conservative. Several right-wing Republicans have already vowed to oppose any compromise that retreats from cuts that were part of their debt-limit bill.“Republicans should not cut a bad deal,” Representative Chip Roy of Texas, an influential conservative, wrote on Twitter on Thursday morning, shortly after telling a local radio station that he was “going to have to go have some blunt conversations with my colleagues and the leadership team” because he did not like “the direction they are headed.”Representative Ralph Norman of South Carolina, said he was reserving judgment on how he would vote on a compromise until he saw the bill, but added: “What I’ve seen now is not good.”Former President Donald J. Trump, who has said that Republicans should force a default if they do not get what they want in the negotiations, also was weighing in. Mr. McCarthy told reporters he had spoken with Mr. Trump briefly about the negotiations — “it came up just for a second,” the speaker said. “He was talking about, ‘Make sure you get a good agreement.’”After playing a tee shot on his golf course outside of Washington, Mr. Trump approached a reporter for The New York Times, iPhone in hand, and showed a call with Speaker Kevin McCarthy.“It’s going to be an interesting thing — it’s not going to be that easy,” said Mr. Trump, who described his call with the speaker as “a little, quick talk.”“They’ve spent three years wasting money on nonsense,” he added, saying, “Republicans don’t want to see that, so I understand where they’re at.”Luke Broadwater More

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    Military Spending Emerges as Big Dispute in Debt-Limit Talks

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    President Biden has offered to freeze discretionary spending, including for defense. Republicans want to spend more for the military, and cut more elsewhere.Funding for the military has emerged as a key sticking point in reaching an agreement to raise the nation’s borrowing limit and prevent a catastrophic default, with Republicans pushing to spare the Defense Department from spending caps and make deeper cuts to domestic programs like education.President Biden has balked at that demand, pointing to a long series of past budget agreements that either cut or increased military spending in tandem with discretionary programs outside of defense.How the sides resolve that issue will be critical for the final outcome of any debt deal. It remains possible that in order to reach a deal that prevents a default, Democrats will accept an agreement that allows military spending to grow even as nondefense spending falls or stays flat.Mr. Biden’s aides and congressional Republicans deputized by Speaker Kevin McCarthy are trying to negotiate an agreement to lift the borrowing limit before the government runs out of money to pay its bills on time, which could be as soon as June 1. Republicans have refused to raise the limit unless Mr. Biden agrees to cuts in federal spending outside of the military.The talks over spending cuts have narrowed in focus to mostly cover a relatively small corner of the budget — what is known as discretionary spending. That spending is split into two parts. One is money for the military, which the Congressional Budget Office estimates will total $792 billion for the current fiscal year. The other half funds a wide range of domestic programs, like Head Start preschool and college Pell Grants, and federal agencies like the Interior and Energy Departments. It will total $919 billion this year, the budget office estimates.A separate category known as mandatory spending has largely been deemed off limits in the talks. That spending, which is the primary driver of future spending growth, includes programs like Social Security and Medicare.Administration officials have proposed freezing both halves of discretionary spending for next year. That would amount to a budget cut, compared with projected spending, under the way the budget office accounts for spending levels. Spending for both parts of the discretionary budget would be allowed to grow at just 1 percent for the 2025 fiscal year. That could also amount to a budget cut since 1 percent would almost certainly be less than the rate of inflation. That proposal would save about $1 trillion over the span of a decade, compared with current budget office forecasts.Republicans rejected that plan at the bargaining table. They are pushing to cut nondefense spending in actual terms — meaning, spend fewer dollars on it next year than the government spent this year. They also want to allow military spending to continue to grow.“It just sends a bad message and Republicans feel like it would not be in our best interest to cut spending at this juncture, when you’re looking at China and Russia and a lot of instability around the world,” said Representative Robert B. Aderholt, Republican of Alabama, who sits on an Appropriations panel that oversees Pentagon spending. “That’s been the basic position that most Republicans have.”Mr. McCarthy sounded a similar note when speaking to reporters on Thursday. “Look, we’re always looking where we could find savings and others, but we live in a very dangerous world,” he said. He added, “I think the Pentagon has to actually have more resources.”Republicans included 10-year caps on discretionary spending in a bill they passed last month that also raised the debt ceiling through next year, and party leaders said they would exempt the military from those caps. Mr. Biden has vowed to veto the bill if it passes the Senate in its current form, which is unlikely.White House officials have hammered Republicans over concentrating their proposed discretionary savings on domestic programs, saying their bill would gut spending on border enforcement, some veterans’ care, Meals on Wheels for older Americans and a host of other popular programs.“Speaker McCarthy and I have a very different view of who should bear the burden of additional efforts to get our fiscal house in order,” Mr. Biden said on Thursday at the White House. “I don’t believe the whole burden should fall on the backs of the middle class and working-class Americans.”Congressional Democrats, including members of committees that oversee military spending, have attacked Republicans for focusing largely on nondefense programs.“If you’re going to freeze discretionary spending, there’s no reason on earth why defense shouldn’t be part of that conversation,” said Representative Adam Smith of Washington, the top Democrat on the Armed Services Committee. Republicans, he said, “are taking a hostage to advance their very narrow agenda. I’m not a fan of that. That’s not something I’m going to want to support.”Any agreement that increased military spending while freezing or cutting other discretionary spending would break from a budget-deal tradition that dates to 2011, when House Republicans refused to raise the debt limit until President Barack Obama agreed to spending cuts. The deal that avoided default was centered on spending caps that split their reductions evenly between defense and nondefense programs.The push to increase military funding while cutting more heavily elsewhere reflects a divide in the House Republican caucus. It includes a large faction of defense hawks who say the military budget is too small, alongside another large faction of spending hawks who want to significantly shrink the fiscal footprint of the federal government.Mr. McCarthy needs both factions to retain his hold on the speakership, which he narrowly won this year after a marathon week of efforts to secure the votes. And he will need to navigate them both as he tries to pass any debt-limit agreement with Mr. Biden through the House.Catie Edmondson More