Millions of Americans could face huge consequences unless House Speaker Kevin McCarthy can escape the debt trap he set up for President Joe Biden, which in turn threatens to capture his fellow House Republicans.
The California Republican took to Wall Street on Monday to deliver a fresh warning that the House Republican majority will refuse to lift government borrowing caps unless Biden agrees to spending cuts that would effectively offset his domestic agenda and weaken his White House legacy.
However, McCarthy also assured traders that he would never allow the U.S. government to default — a potential disaster that could halt Social Security payments, trigger a recession and lay off workers by the fall if the debt ceiling is not raised.
Herein lies the risk to Americans. It’s hard to see how a new speaker with a slim majority and a conference packed with extremists could engineer either of these outcomes.
Most countries do not require legislatures to raise government borrowing thresholds. But the oddities of America have turned what was once a routine duty into an opportunity for political shenanigans in a polarized era. Because the government spends more than it takes in, it has to borrow money to service its debts and pay for the spending Congress has authorized. It has no problem getting more credit because America pays its bills and has always had a top-notch credit rating, despite previous downgrades on the threat of default.
At least, that’s how it works so far.
McCarthy implored his conference in a closed-door meeting on Tuesday to support a bill that would raise the debt ceiling for a year but would require a series of spending concessions from Biden. He described the measure as an initial way to force the president to the negotiating table. But the bill is purely tactical because it has no chance of passing the Democratic-led Senate.
But there are signs of how difficult it will be for the speaker to get off to a successful start, with signs of disagreement among Republican members over what should be included in the package.
Rep. Scott Perry, chairman of the hawkish House Freedom Caucus, has been frustrated by the lack of clarity on the plan and wants deep cuts.
“I have absolutely no idea what’s in the package. That’s the problem,” Perry told reporters. So far, some members seem reluctant to commit. Conservative MP Tim Burchett told CNN’s Manu Raju, “I’m open to it, but I’m still voting no.”
It is not uncommon for different factions of the congressional majority to haggle over the details before reaching a final package. House Financial Services Chairman Patrick McHenry, a McCarthy ally, is confident the plan will pass the House. “The question is, once we pass this package, what is the White House going to do? We’ve made it clear that the House will not pass a definitive debt ceiling,” he added. “So we’re going to get the first opening offer here. We’re going to see if the president is willing to come to the table and negotiate like previous presidents did.”
McHenry’s comments, however, reflect a major flaw in the Republican strategy because it relies on McCarthy’s belief that Biden has no choice but to return to the negotiating table.White House insists House do its job and pass a simple bill that just raises the borrowing limit
In effect, McCarthy has already put his leadership skills to a stern test as there is no guarantee he will pass the measure in the House, where he can only lose four votes, and there is little sign of what plans a grumpy GOP can agree on. unanimous. How much to cut. Even if the measure passes the House in the coming weeks, it could be an idealized Republican product that Biden and the Democratic Senate will never bite. Any subsequent package would almost certainly feature concessions that could weaken its support for the Republican Party.
Still, the speaker was generally upbeat when he predicted on Monday that he would have enough votes to pass his preliminary bill.
“I think we have 218 people to raise the debt ceiling,” McCarthy told CNN. “We agreed on a lot in the meeting. We’ll get together and work on it.”
However, his assurances may not be very reassuring, given that his similarly flippant prediction in January that he would get the votes to win the Speaker’s seat turned into a farce in which he made the most radical members of his party. He won his dream job with huge concessions and needed 15 votes to be eventually elected.
But because of the debt ceiling, American livelihoods and the global economy, not McCarthy’s immediate political ambitions, are at stake.
So far, Republicans seem to be having trouble negotiating with themselves, let alone Biden. Republican Rep. Dusty Johnson of South Dakota, who is helping shape the Republican Party’s position, said that while the party hopes to pass the preliminary bill next week, challenges remain.
“I think the hardest part is just that there have been countless conservative policy victories, which, of course, we all want to see,” Johnson told CNN’s Manu Raju. “The reality is that in negotiations, you can never get everything you want. So I think our biggest question now is how do we compress these thousands of wishes into a manageable and believable number of demands?”
Another complication is that some members of the Republican conference say they would never, in principle, vote to raise the debt ceiling — anyway. With a strong Republican majority, that insistence can be ignored. In McCarthy’s narrow majority — guaranteed after the 2022 midterm elections fell short of Republican expectations — they have real leverage. Democrats would have little incentive to help McCarthy out of trouble if the GOP were to defect, since they would likely have to vote for the deep cuts that Biden opposes in any eventual GOP bill. Amid his fight to win the job, the speaker may not have risked using Democratic votes anyway after agreeing to a rule that would allow any member to vote on his removal.
The upcoming debt-ceiling showdown could be a defining moment in two years of uneasy cohabitation between the Democratic president and the Republican speaker of the House of Representatives. Neither Biden nor McCarthy can lose, and the results will shape their legacy.
Republicans are not wrong to try to use the leverage they won in democratic elections to further their political goals of cutting public spending. There are some Republican lawmakers who genuinely worry about debt and deficits — even if their party is in government. Many economists worry about the ballooning national debt, which has topped $31 trillion. And Biden’s massive spending on Covid relief packages, infrastructure, climate mitigation measures and health care plans has fueled a debate over whether he’s exacerbated the inflation crisis.
But are Republicans picking the right hill for the fight when millions of jobs, market-linked pension plans and economic well-being are at risk? The authoritarian nature of McCarthy’s position paid little attention to the delicate balance of power. Democrats control the White House and the Senate, so despite narrowly handing the House to Republicans, voters may have been looking for compromise rather than confrontation.
Republicans have also faced accusations of hypocrisy because they had little problem raising the debt ceiling when Donald Trump was president and he rarely worried about big spending. The 45th commander-in-chief also said in a videotape of his White House run that he couldn’t believe anyone would use the debt ceiling as a “negotiating wedge.” Republicans have been known to turn fiscal hawks when Democrats take office, but they tend to look the other way when one of their own is in the Oval Office.
To win this fight, McCarthy would have to somehow shift the political dynamic and hold Biden accountable for any defaults and economic tensions that could start even before the country hits a fiscal cliff.
On Monday, he tried to do that by insisting that the biggest threat to the U.S. economy was not default but rising national debt.
“It is no exaggeration to say that the US debt is a time bomb that will detonate unless we take serious and responsible action. However, how has President Biden responded to this issue? He has done nothing. So in my opinion Come on, I think the rest of the United States, it’s irresponsible,” he said.
Previous fiscal showdowns between a Republican-controlled Congress and a Democratic president have often played out poorly for Republicans. Presidents Bill Clinton and Barack Obama, for example, gained political support by calling their enemies in the House economic arsonists.
McCarthy needs to reverse the equation, which is why he’s trying to paint Biden as stubbornly refusing to negotiate concessions to raise the debt ceiling. The two haven’t met in the past 75 days, and the White House has stuck to its stance that the venue for the talks is out of budget — which House Republicans have yet to come up with — and doesn’t have the full confidence and trust of the U.S. government and the U.S. as a financial safe haven Reputation is at stake.
Therefore, McCarthy was caught between a rock and a hard place. Congress, not the president, has the authority to raise the government’s borrowing limit. However, the speaker asked Biden to give up his store, a role that only McCarthy and his lawmakers can fulfill. Nobody benefits from a default — least of all a president who may be up for re-election. But it’s hard to see how McCarthy could emerge from the conundrum as a winner if he sparked an economic meltdown.
On Monday, the White House twisted that particular knife.
Spokesman Andrew Bates said: “There is a responsible solution to the debt ceiling: fix it quickly, without brinkmanship or hostage-taking – as Republicans did three times in the last administration and as President Trump and as President Reagan advocated during his tenure.”
Republicans in the Senate have so far struggled to avoid chaos. But Senate Republican Leader Mitch McConnell at least gave his colleagues in the House some moral support when he returned to the Capitol Monday after recovering from a fall.
“President Biden is not going to put his fingers over his ears and refuse to listen, talk or negotiate. The American people know this. Participation is not voluntary.
McCarthy’s comments on Monday added to the impression that a damaging political crisis over the debt ceiling, months in the making, is boiling over.
As Senate Democratic Majority Leader Chuck Schumer of New York said Monday: “He went all the way to Wall Street and gave us no more details, no more facts, no new information, and I’ll be blunt: If the Speaker McCarthy continues in this direction, and we’re headed toward default.”