The debt ceiling talks have broken down and I'll tell you, my best advice for the GOP is to stick to your guns. Speaker Kevin McCarthy and company passed an excellent bill to raise the debt ceiling and implement much-needed budget reforms. Mr. McCarthy had a tremendous victory, with the help of his conference, including the Freedom Caucus.
Nobody in Washington expected this, not the president in the White House, not Chuck Schumer in the Senate, not the Bernie Sanders socialists and not the mainstream media. That is, as of today, the only plan to increase the debt ceiling and avoid default is the McCarthy plan. It's the only plan, and my view is Republicans should stick with it.
Here's Freedom Caucus Chairman Scott Perry on the show last night.
REP. SCOTT PERRY: The House has passed a bill and there's no reason why the House should just keep on negotiating with itself when the Senate can't be bothered to come in and pass anything. If the Democrats have a different plan, we're certainly happy to look at it, but, Larry, they haven't passed anything.
KEVIN MCCARTHY DOUBLES DOWN ON GOP'S DEBT CEILING STANCE: 'I NEVER GIVE UP'
He is right — no plan from the Democrats, no plan from the White House. The only plan is the McCarthy plan. The point is, Democrats are trying to tear it apart, piece by piece. In the staff negotiations, they said ending student loan cancelations is off the table. Curbing the unlimited greenie tax credits in the misnamed Inflation Reduction Act, a bill that would cost America a fortune over time, Democrats put it too off the table.
As far as permitting reforms sounds good, there may have been a consensus in favor of them, it turns out White House position want permits only for greenie projects and greenie transmission pipes for the electricity grid. This is nonsense.
What about fossil fuels? What about oil and gas? Another great victory by Speaker McCarthy and Company was H.R. 1, the Lower Energy Costs Act, quarterbacked by Steve Scalise, which would've reopened the fossil fuel spigots and cut prices for gasoline, electricity and a hundred different parts of the American economy that rely on refined petroleum products. The GOP can't give that up to the Democrats.
Everybody is talking about the importance of work requirements, but the Democrats are welching on that one too, making a big stink about excluding Medicaid, and it's wrong. Workfare reform in Medicaid for people up to 55 years old without any kids would open the door to new economic opportunities and emphasize the dignity and centrality of a work-based culture that is part of the American soul. By the way, it would also save about $100 billion.
Democrats are also welching on the 1% spending cap. They want to raise it to who knows what. They're arguing that any cap should only last one or two years, which means very little spending restraint.
Republicans should continue to emphasize pay-go reforms, meaning any increases in defense have to be offset by non-defense spending. Of course, we have to protect our national security.
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The McCarthy package is worth about $5 trillion of spending savings and a 1% cap means programs can still increase, but at an appropriately slower pace after the Biden spending binge of the last couple years that has generated high inflation, declining real wages for typical blue-collar families and put the economy on the very edge of a deep recession.
The GOP has a good package. It was met with good reviews in almost every corner of opinion. Clearly voters insist by 60%, up to 80%, on spending cuts to go along with a debt ceiling increase. Mr. McCarthy and his conference delivered a very good and popular product — stay with it. Save America. Pass the McCarthy bill.
This article is adapted from Larry Kudlow’s opening commentary on the May 19, 2023, edition of "Kudlow."
