Debt Ceiling 2023: 5 Ways GOP Budget Cuts Could Hit Your Wallet — Will Social Security Be Impacted?
One thing to keep in mind about the Republican debt-ceiling plan unveiled last week is that it’s not likely to be signed into law in its current form. Even if it passes the U.S. House, it likely won’t get approved by the Democrat-controlled Senate or signed by President Joe Biden, experts say.
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Even so, some parts of the GOP plan might eventually make it into law. House Majority Leader Kevin McCarthy (R-Calif.) claims the plan will save taxpayers $4.5 trillion via spending cuts, Yahoo Finance reported. It would also raise the federal borrowing limit by $1.5 trillion, thus helping the government avert a default.
The proposed spending cuts target a number of federal programs, from student loan forgiveness and food purchasing assistance to IRS funding, green energy tax credits and COVID-19 aid.
One thing the cuts won’t touch is Social Security — at least directly. The plan does not include cuts that would scale back Social Security retirement benefits. However, overall budget cuts to federal programs could make it more difficult to administer benefits, Reuters reported.
What the cuts probably won’t do is lower your tax bill. As Reuters noted, McCarthy’s plan does not include provisions to extend temporary individual tax cuts that are due to expire in 2025.
It didn’t take long for Democrats to attack the GOP plan. An April 20 White House blog written by Shalanda Young, Director of the Office of Management and Budget, accused Republicans of “threatening default in order to extract a wish list of extreme, unrelated policies that will hurt hard-working families … Their bill would force a cut of 22 percent — cuts that would grow deeper and deeper with each year of their plan.”
The plan in its current form could hit Americans’ wallets in several ways. Here’s a look at five of them.
Student Loan Borrowers Would Not Get Debt Relief
The Republican bill would strike down Biden’s federal student loan forgiveness plan, which aims to cancel up to $20,000 in debt per borrower. About 40 million Americans are eligible for the relief, CBS News reported. If the plan is shut down, those Americans will have to start repaying their loans as early as this summer. This part of the GOP bill isn’t likely to make it into law, but legal challenges might kill the loan forgiveness plan anyway.
Veterans Could See Medical Care Funding Cut
According to the White House, cutting federal funding by 22% could lead to 30 million fewer veteran outpatient visits, which means some veterans might have to pay for part of their care out-of-pocket. The cuts could also lead to 81,000 lost jobs across the Veterans Administration.
Low-Income Households Would See Lower Benefits
The McCarthy plan would increase work requirements for benefit programs such as the Supplemental Nutrition Assistance Program (SNAP), making it more difficult for low-income Americans to get monthly benefits. In addition, the White House estimates that a 22% federal funding cut would mean that 1.7 million women, infants and children would lose nutrition assistance through the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).
Green Tax Credits Would be Eliminated
The Republican plan would rescind key aspects of the Inflation Reduction Act signed into law last year. These include repealing green energy tax credits and getting rid of a proposed high-efficiency electric home rebate program.
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Housing Costs Might Rise for Some Americans
The White House estimates that a 22% cut would eliminate funding for Housing Choice Vouchers for more than 630,000 households, including 190,000 households headed by seniors and 50,000 headed by veterans.
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This article originally appeared on GOBankingRates.com: Debt Ceiling 2023: 5 Ways GOP Budget Cuts Could Hit Your Wallet — Will Social Security Be Impacted?
