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House Republicans float one spending cut in a debt ceiling bill: Unspent Covid money

Republicans don't have a fully fleshed-out plan yet, but it's an early glimpse into the party's mindset going into a potential debt ceiling crisis later this year.
The U.S. Capitol Building is seen on January 19, 2023 in Washington, DC. U.S. Treasury Secretary Janet Yellen warned Republican and Democratic leaders that the federal government will reach its limit on the amount of money it is able to borrow, and that further action by lawmakers is needed by June 5th when the U.S. could go into economic default.
 Congress faces a June 5 deadline to act or breach the debt limit.Anna Moneymaker / Getty Images file

WASHINGTON — There’s no Republican plan, let alone a bill, to resolve the debt ceiling problem. But some GOP lawmakers are floating one idea to include in a package: rescinding approved but unspent Covid relief funds.

Taking back the unused pandemic response money “certainly could” be in a debt ceiling measure to avert default, Rep. Tom Cole, R-Okla., the chair of the powerful Rules Committee, said.

“I would hope we look at that,” Cole said. “It’s something that ought to be on the table.”

Rep Mike Kelly, R-Pa., who sits on the Ways and Means Committee that oversees taxes and large portions of the U.S. budget, said he’s open to it. It would be “insane” for Congress not to look at options to cut red ink by nixing unnecessary spending, Kelly said.

“There’s areas that we should not be spending and where we could actually either reposition or just not spend it, and then bring down our debt,” he said.

“We can make cuts that don’t hurt people,” Kelly added.

The idea isn't yet ready for prime time in the GOP-run House, the Democratic-controlled Senate or the White House. But it is the most specific Republicans have gotten in terms of what they'd like to attach to a debt limit hike, a question that GOP lawmakers have been notably vague on, even as they demand spending cuts as a concession to pay the country's bills. The Treasury Department has set a June 5 deadline for Congress to act or breach the debt limit.

House Republican aides point to government estimates showing $4.61 trillion has been authorized in Covid-19 spending, but $4.12 trillion has been spent. That leaves nearly $500 billion in unspent funds, although a portion of that has been “obligated” to certain pots of money and may be difficult to return to the U.S. Treasury.

Rep. David Schweikert, R-Ariz., a Ways and Means member, signaled support for the idea, but cautioned that there’ll be challenges in identifying and reclaiming the unspent money.

“There’s some disputes on what the dollar amounts actually are, and what’s actually technically obligated and what’s not obligated,” Schweikert said. “Because we have some states that … put it into their rainy day funds. And there’s specific language that you can’t supplant it. So that’s that sort of thing you’re going to have to dig into and figure out what’s really there.”

At an Oversight Committee hearing about federal pandemic spending on Wednesday, Rep. Andy Biggs, R-Ariz., pressed the U.S. Government Accountability Office on how much of the money is left and unspoken for.

“As of November 2022, there’s about $157 billion unobligated funds,” Gene Dodaro, the comptroller general, responded.

“Unencumbered, unobligated, unspent?” Biggs asked.

“Right,” Dodaro replied.

On Capitol Hill, some Republicans believe a proposal like tapping excess Covid money could fall into a political sweet spot that adheres to both parties' red lines on the debt ceiling. It may satisfy GOP demands to cut some spending — though it won't come close to addressing conservative wishes to balance the budget. It’s the sort of add-on that Democrats may be willing to dismiss as fig leaf, given that it's unspent money, and especially as President Joe Biden seeks to declare victory against Covid.

The White House said Biden made clear in his Tuesday meeting with Speaker Kevin McCarthy that preventing default is “not negotiable or conditional.” Most Democrats are standing with Biden, insisting that the debt ceiling be lifted without strings attached.

Rep. Rosa DeLauro of Connecticut, the top Democrat on the Appropriations Committee, said negotiating on the debt limit is “a nonstarter.” But when asked broadly about the policy merits of sending certain Covid money back to the Treasury, she signaled openness to reviewing ideas.

“I have to take a look and see what has been obligated, and so forth. I just want to see where that is — so much of that has been obligated,” DeLauro said.

McCarthy's office had no comment on the idea in a debt limit. At a press conference Thursday, McCarthy declined to say when Republicans will put pen to paper on a spending cut plan.

“I’m not going to negotiate this in the press. I’m sorry,” he said.

As for a timeline, McCarthy said only that he and Biden expect to meet again after what he called a positive meeting.

Whether Covid money recapture is “part of the of the negotiations that the speaker is initiating — that remains to be seen,” said Rep. Mario Diaz-Balart, R-Fla. “But as appropriators, we’re going to be scrubbing everything.”

Schweikert said recapturing Covid funds could be “low-hanging fruit” for Congress to target in a debt limit extension.

“Even around here today,” he added, “low-hanging fruit requires some intellectual gymnastics.”