Ahead of Biden’s budget proposal, House Republicans to emphasize US debt in the spotlight.

House Republicans are planning to address the $31.4 trillion debt of the federal government in a closed-door meeting, while President Joe Biden is set to unveil a spending plan for 2024 that his administration claims will help limit the debt’s growth. Phillip Swagel, the director of the nonpartisan Congressional Budget Office, is expected to brief both Republicans and Democrats on the potential threats of the growing national debt, which could surpass the size of the U.S. economy in the next decade if no preventive measures are adopted.

The Democrats’ 2024 spending plan is expected to reduce the deficit, which is the measure of how much more the government spends than it takes in, by $2 trillion over a decade. The plan will also extend the life of the Medicare healthcare plan for Americans aged 65 and older, and raise taxes on billionaires and other high-income earners. Republicans are expected to present their budget by April 15, which includes $150 billion in cuts to nondefense discretionary programs for 2024. The proposed budget would reduce spending to the fiscal 2022 levels and save $1.5 trillion over a decade by keeping spending increases annual increases at just 1%.

These budgets are expected to be the starting point for negotiations between House Speaker Kevin McCarthy and President Biden regarding spending for fiscal 2024, which starts on September 1. These discussions come at an elevated level of significance this year as the federal government is expected to hit the $31.4 trillion debt ceiling in the summer. Failure to act by that time could trigger a potentially disastrous default.

House Speaker Kevin McCarthy is hoping to secure spending cuts before the narrow Republican majority would agree to a debt ceiling raise. Biden, on the other hand, insists that Republicans must agree to a “clean” debt ceiling increase without a preliminary deal on spending. McCarthy, however, disagrees with this approach.

Phillip Swagel is expected to appear alongside Republican House Budget Committee Chairman Jodey Arrington and the panel’s top Democrat, Representative Brendan Boyle, at Wednesday’s 4 p.m. briefing. Both parties accuse each other of contributing to the country’s fiscal position, with Republicans claiming that spending under Biden is what caused the increased debt. Democrats, however, point the finger at the tax cuts for businesses and wealthy individuals that were passed under former President Donald Trump, which cost the budget $2 trillion in revenue.

Even though neither Biden’s proposal nor the one Arrington’s committee is preparing would result in a balanced budget, large savings on deficits can be realized through proposed modifications to the budget. Congress’s ability to “nearly stabilize” the growth of federal debt by reducing deficits by an average of $500 billion per annum for the next ten years could save a whopping $5 trillion, dwarfing the combined ten-year savings proposed by both Biden and Arrington, according to Swagel.

The CBO projects that the annual deficits between 2024 and 2033 will average $2 trillion, coming close to pandemic-era records by the end of the decade. The stakes of such negotiations are high, and Republicans and Democrats will need to bridge their differences to avoid a potential financial disaster.

In summary, the growing debt of the federal government is a growing concern that both parties are keen on addressing. Republicans are planning to address it through spending cuts, while Democrats are seeking to reduce the deficit through increased taxes on high-income earners. The Congress’s ability to reduce deficits by an average of $500 billion per annum can substantially reduce the growing debt of the federal government, which is projected to reach alarming levels by the end of the decade. Republicans and Democrats must negotiate and make compromises to stabilize the government’s fiscal position and avoid a financial crisis.

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