Tipsheet

Heritage Action Puts Lawmakers on Notice Over Debt Deal

Spencer Brown
Spencer Brown  |  May 31, 2023 12:00 PM

Heritage Action put lawmakers on notice Wednesday morning that the Fiscal Responsibility Act would be considered a "key vote," and those voting for the bipartisan debt deal would be penalized on the group's scorecard that ranks how conservative members of the House and Senate are when it comes to their votes. 

According to the lobbying and advocacy extension of the Heritage Foundation, the debt limit deal "does not meet the moment, and it does not address the root problems that have led to nearly $32 trillion in national debt."

The decision to score against the Fiscal Responsibility Act comes one day after Heritage Action released a statement making its opposition to the debt deal official. 

In the explanation of its decision, Heritage Action said that "[a]ny increase in the debt ceiling needs to address...years of reckless fiscal policy" that caused "high inflation and sluggish economic growth." 

The Fiscal Responsibility Act, according to Heritage Action, "fails to meet this standard, as it falls short of the demands that have been outlined by Heritage Action since January: cap and cut overall spending to FY 22 levels, include pro-growth policies that fully offset a transparent dollar amount increase in the debt ceiling, and adequately address the trajectory of federal spending."

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The Heritage Action "key vote" statement continues:

As a long-standing policy position, we have consistently called for dollar-for-dollar cuts and reforms commensurate with any debt ceiling increases. This bill does not do that. This bill suspends the debt ceiling until 2025, enabling President Biden and a divided Congress to generate an estimated $4 trillion in new federal debt.

This bill does not do enough to reduce spending. Best estimates, which rely on waivable provisions in the bill, show that H.R. 3746 would only reduce spending against the CBO baseline by $2.1 trillion. Further, the pro-growth policies, rescissions, and administrative sequestration provisions would likely only result in small scale changes in economic output and federal deficits.

Together, the estimated $2.1 trillion spending reduction and vastly insufficient growth and rescission measures do not justify an estimated $4 trillion in new federal debt. We called for commensurate spending cuts related to any debt limit increase, and this was not adhered to in the legislation.

As written, the bill would cut non-VA, non-defense discretionary spending by $40 billion, amounting to FY 2022 funding levels. However, it would maintain VA funding and increase defense funding by $28 billion—leaving the total, true cut at only roughly $12 billion for FY 24 with a potential for increased spending in the out years of the agreement.

While the bill would rescind roughly $30 billion in COVID emergency relief funding and IRS funds, it is not clear that those “savings” would be realized by Americans. This is, in part, because the bill appropriates $22 billion of those rescissions to a single fund at the Department of Commerce intended for congressional direction, and it is not ensured to be used toward deficit reduction.

Heritage Action did "commend the victories achieved through honest negotiations by Speaker McCarthy with the White House, such as environmental permitting reform that will help unlock pent up construction demand and commonsense work requirements for the SNAP and TANF programs" as well as "the breaking of a long-held Democrat demand for dollar-for-dollar parity with defense and non-defense spending." However, Heritage Action reasoned, "these victories are smaller and less impactful than all that is needed to grow the economy and right-size the fiscal house of this nation."

The Heritage Action notice followed a statement earlier this week from Heritage Foundation President Kevin Roberts that called on Republican lawmakers to "go back to the negotiating table" to get more from Biden and Democrats: