CBO says McCarthy’s debt limit plan would cut deficits by $4.8 trillion, kick 600K off Medicaid

House Speaker Kevin McCarthy’s bill to raise the debt ceiling and slash federal spending would save taxpayers a total of $4.8 trillion over 10 years, the Congressional Budget Office said Tuesday.

The CBO released an analysis of the bill that shows if all the spending cuts are implemented, federal deficits would decline $300 billion more than House Republicans have predicted. The House GOP said the total savings would be $4.5 trillion. 

“This legislation is just a first step toward getting our fiscal house in order and a good faith effort to bring the president to the negotiating table,” said House Budget Committee Chairman Jodey Arrington, Texas Republican.

The GOP legislation would impose new requirements that individuals work at least 20 hours per week to qualify for Medicaid, food stamps, and direct cash payments. It also increases the age limit for work requirements from 49 to 55.

CBO estimates the changes would reduce federal spending by $120 billion through 2033. The savings would come at the expense of 600,000 individuals losing access to Medicaid over the same period.

When it comes to Food Stamps, CBO estimates 275,000 people would lose benefits each month under the new requirements. 

Republicans say the changes are necessary because welfare rolls have become bloated since the onset of the coronavirus pandemic. 

The analysis comes as Mr. McCarthy, California Republican, readies to push the debt legislation through the House this week. The bill would cut federal spending by $130 billion for the upcoming fiscal year and limit future budget growth to 1% annually over the next decade.

GOP lawmakers are seeking to rescind at least $90.5 billion unspent COVID-19 relief and $200 billion in green energy tax credits passed by Democrats last year. They also want to cancel Mr. Biden’s student loan forgiveness program, which the CBO estimates will save $315 billion over the next decade.

“The work requirements in this bill will help more Americans get back in the workforce,” said House Ways and Means Committee Chairman Jason Smith, Missouri Republican. “Today’s workforce participation rate is still behind where it was before the pandemic.”

Mr. Biden is threatening to veto the bill if it passes the House and Democratic-controlled Senate.

“The bill stands in stark contrast to the president’s vision for the economy,” the White House said in a statement.

Mr. Biden’s veto threat could be jumping the gun, however. Mr. McCarthy is struggling to unify House Republicans behind the legislation. More than a dozen GOP lawmakers are on the fence about the bill.