House Republicans prep debt limit fight to 'force action on our nation's spending problem'

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FIRST ON FOX: Conservative Republicans in the House of Representatives are preparing to stage a fight over federal spending when the suspension of the debt limit expires on July 31, hoping to draw focus to the massive $28-plus trillion debt as they oppose President Biden's sprawling and expensive agenda. 

Republican Study Committee Chair Rep. Jim Banks, R-Ind., is sending a memo to fellow Republicans Tuesday laying out potential demands they can make in exchange for increasing the debt limit, which will snap back to whatever level it is at on July 31 once the suspension expires. The memo, first obtained by Fox News, lays out the pending fight as an "Opportunity for Fiscal Reform." 

"Given the worsening fiscal outlook for the federal government and at least 3 ½ more years of President Biden proposing trillions and trillions of dollars of deficit-financed spending, it is more important than ever for conservatives to reclaim the debt limit as a tool to highlight and force action on our nation’s spending problem," Banks says in the memo. 

The document lays a handful of "fiscally responsible reforms that Conservatives may demand to reclaim our fiscal future."

SENATE REPUBLICANS REIGNITE PUSH FOR DEBT CEILING, SPENDIGN CUTS

Among the possible strategies, Banks says Republicans could demand offsets to any increase of the debt limit; refuse to vote for a suspension of the debt limit and instead insist on a "numerical limit"; refuse to vote for any "must pass" spending package that includes a debt limit increase; push for budget process reforms; and more. 

Banks notes that in most cases since 1985, most major "fiscal responsibility measures" were attached to an increase in the debt ceiling. 

But Banks and his fellow conservatives are likely to have a hard time getting any of their demands implemented as Democrats, who largely support Biden's expensive proposals from infrastructure to climate change to his American Families Plan, control the House and Senate. 

Instead, Republicans are likely to use the debt limit battle as a cudgel to attack House Democrats in purple districts ahead of the 2022 midterms. 

Democrats, meanwhile, are expected to try to plow ahead with increasing the debt limit, whether via another suspension or by increasing it to a certain number. 

"I think it's an absolute disgrace that Republicans are using the debt ceiling, which deals with the financial security, as sort of a political issue. We should get something done the right way," Senate Majority Leader Chuck Schumer, D-N.Y., said at a press conference last month. 

Rep. Jim Banks, R-Ind., appears on Fox News. Banks is encouraging fellow Republicans to use the impending debt limit fight as an "Opportunity for Fiscal Reform." (Credit: Fox News)

"Congress should move forward in a bipartisan manner like they have in the past," White House press secretary Jen Psaki also said last month. 

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If Congress ends up running up against the debt ceiling, the Treasury Department will use what are called "extraordinary measures" to ensure the U.S. does not go over the debt limit. But Treasury Secretary Janet Yellen said last month it's not clear how long the U.S. would be able to last in such a situation. 

"All I can really tell you is that the debt ceiling comes back into effect on July 31, and there are a series of so-called ‘extraordinary measures’ that are ordinary in the sense that they’ve been used many times in the past," Yellen said. 

"But it’s exceptionally challenging this time to try to figure out just how long those measures are going to last, in part because of higher and more volatile spending in revenue numbers associated with the state of the economy and the pandemic," she added. "So we’ve evaluated a range of scenarios, and we are concerned that there are scenarios that would give a very limited amount of additional time through the use of extraordinary measures, but I can’t really be more precise than that."

FOX Business' Blake Burman and Fox News' Jason Donner contributed to this report.