Fact check: McCarthy’s misleading claim that the debt ceiling hike in 2019 paid for all of Trump’s policies

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“The past debt ceiling paid for everything in the Trump administration, plus seven months of this Biden administration.”

– Minority Parliamentary Leader Kevin McCarthy, R-Calif., In a Fox News interview, Sept.21

Congress is once again deadlocked on whether to extend the federal government’s borrowing limit, or “debt ceiling.”

After providing votes three times to extend the borrowing limit under President Donald Trump, Republicans are no longer willing to join now that President Joe Biden is in office. Treasury Secretary Janet Yellen said without Congressional action the government would exhaust its ability to pay its bills sometime in October.

“Failure to meet the debt limit and allow unprecedented default could cause serious damage to the economy and national security,” a bipartisan group of former treasury secretaries wrote to congressional leaders in a letter. September 22. “Even a short-lived default could threaten economic growth. This creates the risk of upsetting markets and undermining economic confidence, and it would prevent Americans from receiving vital services. “

In an interview with Fox News, McCarthy claimed the latest debt ceiling extension, in 2019, “paid for everything in the Trump administration, plus seven months of that Biden administration.”

Not really. Increasing the debt ceiling would cover the cost of programs that have been approved in the past. Today, the government continues to borrow money to pay for policies Trump enacted, such as the 2017 tax cuts for businesses and the wealthy.

The debt ceiling, established in 1917, is the maximum amount of debt that the Treasury Department can issue to pay the country’s bills.

Congress can by law adjust the total amount of money the government can borrow, or it can suspend the limit altogether, which automatically increases the limit to any debt level reached at the end of the suspension period. The debt ceiling was suspended from 2019 to early August under a bipartisan agreement reached under the Trump administration.

If Congress did not prorogue it again, and soon, the government would be unable to pay its debts as they fall due. Administration officials could be forced to reverse, say, $ 20 billion owed to seniors on Social Security, or payments to bondholders who acquired US debt. The economic consequences would be serious and felt around the world.

And yet the debt ceiling often becomes a political football. The Standard & Poor’s rating agency downgraded the US rating from “AAA” to “AA +” in 2011, in part because of a Republican blockade on raising the debt ceiling that year.

“The political spirit of the past few months highlights what we see as US governance and policymaking becoming less stable, less effective and less predictable than we previously thought,” S&P said at the time. . “The statutory debt ceiling and the threat of default have become political currencies in the fiscal policy debate.”

Under Trump, Congress, in bipartisan votes, suspended the debt ceiling in December 2017, March 2019 and August 2019. National debt increased by about $ 7.8 trillion under the Trump administration and s’ now stands at $ 28 trillion.

An analysis last month by the non-partisan Congressional Research Service found that federal debt increased by $ 5.4 trillion from August 2019 (the last time the limit was suspended under Trump) to January 20, 2021 (when Trump left office). It rose an additional $ 675 billion in Biden’s nearly seven months in power in August, according to CRS analysis, requested by Senate Majority Leader Chuck Schumer, DN.Y.

The House voted Tuesday to suspend the debt ceiling until 2022, voting 220-211 along party lines, without Republican support. In the Senate, Minority Leader Mitch McConnell, R-Ky., Says Democrats should go it alone as they separately back a $ 3.5 trillion proposal for future spending.

“The need to increase (or lower) the limit during a session of Congress is motivated by previous decisions regarding income and expenditure arising from legislation passed earlier in the session or during previous years, “according to a CRS report. In other words, raising the debt ceiling would cover costs previously approved, sometimes by the previous president or Congress.

McCarthy went much further on Fox News, claiming as he did that the August 2019 debt ceiling suspension “paid off” in the Trump administration and Biden’s seven months.

“It’s technically true that the last suspension of the debt ceiling took us seven months in the Biden administration, but it’s a very narrow view,” said Marc Goldwein, senior vice president. and Senior Policy Director of the Committee for a Responsible Federal Budget. “It tells you about the time horizon; it doesn’t tell you who is responsible for the debt.

In a nutshell, McCarthy was talking about timing – all overdue bills were paid on time during the period he mentioned. But his argument is flawed because it ignores the full cost of current policies, such as Trump’s tax cuts.

“We are still spending a little on COVID relief [funds] that President Trump promulgated, ”Goldwein said. “We have dramatically increased discretionary defense and non-defense spending under President Trump’s leadership, with bipartisan support, and we’re still losing revenue through tax cuts.”

Trump’s tax cuts in 2017 increased the deficit.

Goldwein added in an email, “We didn’t borrow $ 1.9 trillion in 2017 to fund tax cuts. We enacted a bill that would borrow $ 200 billion to $ 300 billion per year for 8 years. Much of this borrowing is done today and will continue to occur until 2026 or 2027. ”

Rachel Snyderman, associate director of economic policy at the Bipartisan Policy Center, said McCarthy was “incorrect”.

“Yes, Republicans voted to suspend the debt ceiling to allow the Treasury Department to pay the country’s bills in the first year of the Biden administration (and had done so twice before under the Trump administration in December 2017 and March 2019) ”she wrote in an email. “However, the fiscal impacts of policies adopted during an administration do not end when the next president is sworn in, and the increased debt limit allows the government to pay the bills incurred as a result of Republican policies. and past Democrats. “

As Donald Marron, director of economic policy initiatives at the Urban Institute and former acting director of the Congressional Budget Office, said: “The government pays for things by collecting taxes, borrowing, printing money. money and sometimes by selling assets. Suspending the debt ceiling does not pay off; it just allows the government to continue borrowing.

A request for comment from McCarthy’s office was not returned.

McCarthy told Fox News that the August 2019 debt ceiling suspension “paid off” in the Trump administration and Biden’s first seven months.

The assertion is very misleading. Paying your monthly car or home bill regularly doesn’t mean you’ve paid the full price of the sticker. The same goes for government policies like Trump’s 2017 tax cuts, which the government continues to borrow hundreds of billions of dollars a year to fund.

McCarthy wins three Pinocchios.


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