So, 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 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 or the White House, not Senator Schumer, not the Bernie Sanders socialists, and not the mainstream press. That is, as of today, the only plan to increase the debt ceiling and avoid default. It’s the only plan, and my view is the GOP should stick with it. Here’s what the Freedom Caucus chairman, Scott Perry, had to say last night: “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.” The Democrats are trying to tear it apart, piece by piece, in the staff negotiations. They said ending student loan cancellations is off the table. Democrats also took off the table curbing the unlimited greenie tax credits in the misnamed Inflation Reduction Act — a bill that will cost America a fortune over time. As far as permitting reforms, where there seems to be a consensus in favor, it turns out White House negotiators want permits only for greenie projects, and greenie transmission pipes for the electricity grid. This is nonsense. That’s because another great victory by Speaker McCarthy and Company was H.R.1, the Lower Energy Costs Act, quarterbacked by Congressman 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’s talking about the importance of work requirements, but the Democrats are welching on that, 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 children 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. It would also save about $100 billion. Democrats are also welching on the 1 percent spending cap. They want to raise it. And 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. The McCarthy package is worth about $5 trillion of spending savings. A 1 percent 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 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. Polls show clearly that voters insist by 60 percent, up to 80 percent, on spending cuts to go along with a debt ceiling increase. Mr. McCarthy and his conference delivered a very good and popular product. Save America. Pass the McCarthy bill. From Mr. Kudlow’s broadcast on Fox Business News.
