Dark Money’s Behind The Debt Ceiling Plan To Punish The Poor

Republicans in Washington are threatening to blow up the United States’ economy unless Democrats agree to shrink the social safety net by adding work requirements to programs such as food assistance and healthcare. They are billing the effort — which would help corporations grow an exploitable workforce — as necessary to end dependency, boost the economy, and reduce the federal deficit.

In doing so, GOP lawmakers are following the agenda pushed by an obscure conservative think tank bankrolled by far-right billionaires and activists that was behind a recent slew of state bills rolling back child labor laws across the country. The effort comes several years after the GOP passed massive, deficit-busting tax cuts benefiting the wealthy and corporations — and as the party pushes to make those tax cuts permanent, at an estimated cost of $3.5 trillion.

In effect, Republicans want to force Americans in poverty to pick up the tab for the tax cuts they gave to their wealthy donors, while giving those donors more vulnerable workers to exploit.

Republicans are attempting to ram through the think tank’s agenda by refusing to raise the debt ceiling, an arbitrary limit set by Congress on how much money the federal government can borrow, unless Democrats accept sweeping spending cuts and expanded work requirements on social programs.

The government is constitutionally required to pay its debts and meet its contractual obligations, and almost every Congress for the past century has voted to raise the debt ceiling without incident. But with divided control of Congress and Joe Biden as president, Republicans want to use the imminent threat of the U.S. defaulting on its debts and an economic recession as an opportunity to punish the poor.

Last month, House Republicans passed debt ceiling legislation proposed by Speaker Kevin McCarthy (R-Calif.) that would massively cut government spending on social safety net programs — including Medicaid, food stamps, and cash assistance, known as Temporary Assistance to Needy Families (TANF).

The proposal would subject most Medicaid recipients between the ages of 19 and 55 without dependent children to a work requirement, forcing them to work for at least 80 hours a month or earn a minimum monthly salary to remain eligible. The new requirements likely would cause millions of low-income Americans to lose Medicaid coverage.

The plan would also expand food stamp and TANF work requirements to adults aged 49 to 55, which could kick one million people off the food assistance program and more than half a million families off cash assistance.

Study after study has shown that work requirements have no impact on long-term employment outcomes, but they do kick eligible people out of social programs due to administrative burdens and make them poorer.

“When we talk about work requirements, remember, we want to take people from poverty to jobs,” McCarthy told reporters on Monday, adding: “I don’t think it’s right that we borrow money from China to pay somebody that has no dependents, [is] able-bodied, to sit on a couch. What we find is people become more productive.”

McCarthy’s work requirement proposal and his gripes about dependency come straight from the Foundation for Government Accountability (FGA), a conservative think tank that recently made headlines for helping secretly draft several state bills to roll back child labor laws.

One such bill in Iowa would allow 14-year-old kids to “perform non-incidental work in meat freezers” and 15-year-olds to perform “light assembly work as long as the assembly is not performed on machines or in an area with machines,” NBC News reported. The bill, which has not yet been signed by the governor, “appears to violate” federal labor laws, according to Labor Department officials.

“Work requirements will help get Americans out of dependency and back to work, preserving resources for the truly needy,” said the FGA’s president and CEO Tarren Bragdon when House Republicans introduced their debt ceiling proposal. “There has never been a better time to get able-bodied adults back into the workforce.”

Bragdon, a former Maine state legislator, founded the organization in 2011 during the Tea Party’s austerity push as part of the last major debt ceiling standoff, when Republicans demanded significant spending cuts.

One week before Republicans released their current debt ceiling proposal, the FGA released new polling in favor of work requirements. On April 11, the FGA’s polling arm published data showing that more than 70 percent of likely voters support expanded work requirements for cash welfare benefits and food stamps, as well as new work requirements on Medicaid.

The following week, McCarthy proposed expanding work requirements for food stamps and TANF, and imposing new work requirements on Medicaid in his debt ceiling package.

The FGA then put out a white paper claiming that “House Republicans’ proposal for Medicaid and food stamp work requirements will increase the labor force and boost the national economy,” on the basis that “moving just four million able-bodied adults from welfare to work would increase real GDP by an estimated $149 billion.”

Lobbying records show the FGA’s advocacy arm, the Opportunity Solutions Project, started lobbying Congress on work requirements in 2017. In the first quarter of 2023, the group spent $130,000 on lobbying, including on food stamp reform, work requirements, and TANF, according to federal records reviewed by the Lever.

The FGA and its advocacy arm have been bankrolled by right-wing groups in the dark money network built by conservative Supreme Court architect Leonard Leo, and also receive huge money from the family foundation of cardboard box magnate and conservative megadonor Dick Uihlein.

Between 2019 and 2021, Leo’s network contributed nearly $4 million to the FGA and its advocacy arm, according to tax records reviewed by The Lever.

Uihlein’s foundation has contributed nearly $18 million to the FGA since 2014, according to data from the Center for Media and Democracy.

Other major donors to the FGA have included the billionaire Scaife family, heirs to the Mellon aluminum and banking fortune, and DonorsTrust, a donor-advised fund — or pass-through vehicle — long known as conservatives’ “dark money ATM.” (Leo’s network donated $71 million to DonorsTrust in 2021.)

In 2018, the FGA was behind a GOP push to attach work requirements to food stamps — which was passed by House Republicans but failed in the Senate. “Political observers said the inclusion of proposed changes to food stamps was testimony to the FGA’s growing influence in key Republican circles,” the Washington Post reported.

More recently, the FGA and its affiliates have crusaded to eliminate the temporary augmentation of social safety net programs enacted by congressional COVID relief bills — like expanded child tax credits, unemployment benefits, and food stamps.

The FGA noted in its 2021 annual report that it had “leveraged our relationships with governors to help states opt out of the $300 unemployment bonus and build momentum for this federal program to end in September 2021.”

The organization wrote that it had also “capitalized on our work in West Virginia and connections with Sen. Joe Manchin to show 1) the effectiveness of work requirements and 2) how the expanded child tax credit caused dependency, supply chain issues, and inflation problems.”

Manchin, a coal baron turned corporate Democratic senator for West Virginia, reportedly complained to his colleagues that lazy parents would use their expanded child tax credit payments to buy drugs, and demanded that it include a work requirement, before blocking its reauthorization altogether.

Census research found that the expanded child tax credit lifted nearly three million children out of poverty, though temporarily.

This spring, the FGA’s Opportunity Solutions Project was the only group backing legislation in Maine to add work requirements to Medicaid.The FGA also pushed to restart Medicaid redeterminations, or administrative checks on beneficiaries’ eligibility, which often result in people wrongfully losing coverage because they miss a piece of mail. Redeterminations were temporarily paused during the pandemic, but the federal government recently allowed states to start conducting them again.