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US House Republicans push forward on debt ceiling bill despite party concerns

2023-04-25T20:33:19Z

Speaker of the House Kevin McCarthy (R-CA) speaks at the the New York Stock Exchange (NYSE) in New York City, U.S., April 17, 2023. REUTERS/Brendan McDermid/File Photo/File Photo

Top Republicans in the U.S. House of Representatives said on Tuesday they would move forward with a vote this week on a partisan bill to slash spending and raise the government’s $31.4 trillion debt ceiling, despite signs of growing opposition within their own ranks.

House Speaker Kevin McCarthy, who hopes the plan will jumpstart talks with President Joe Biden, ignored reporters who asked if Republicans had the 218 votes needed to adopt the measure, which would raise the borrowing limit by $1.5 trillion.

But he said he was ready to move forward without changing the legislation to rally support.

“Vote on it this week? Yes. This week!” McCarthy told reporters in the U.S. Capitol. “If there’s any change, I’ll be sure to tell you. But right now, we’re moving forward.”

The nonpartisan Congressional Budget Office on Tuesday said the bill would lower the federal budget deficit by $4.8 trillion over the next decade if it were to become law.

“This will pass,” Representative Tom Emmer, the No. 3 House Republican, predicted in an interview. “I’m telling you right now, it will pass the House floor.”

McCarthy can afford to lose no more than four votes to gain House approval. But at least that many appeared to be withholding support on Tuesday.

Regardless of its fate in the House, the proposal has little chance of passing the Democratic-controlled Senate, and the White House said President Joe Biden would veto it if it reached his desk.

Biden said Congress must raise the debt ceiling without conditions, as it did three times under Republican President Donald Trump.

“A default would be totally irresponsible,” Biden said. “We’re not a deadbeat nation.”

Republicans hope a show of unity can force Biden to negotiate after a months-long standoff.

The House Rules Committee, a gatekeeper on legislation, will take up the bill on Tuesday afternoon.

House Appropriations Committee Chairwoman Kay Granger told reporters that party leaders were still working to rally support but that the measure could come to the floor on Wednesday.

“I think it’s possible,” Granger said.

Washington and Wall Street are focused on the coming “X-date,” possibly just weeks away, when the U.S. Treasury would no longer be able to pay all its bills, triggering a default that would shake the global economy.

It could be difficult for Congress to raise the debt ceiling before then if House Republicans are unable to unite behind a proposal, analysts say.

“That’s the scenario that introduces the greatest amount of risk into the equation,” said Rohit Kumar, co-leader of PwC’s national tax office in Washington.

The last prolonged standoff over the debt limit, in 2011, led to a downgrade of the U.S. credit rating, which shook financial markets and raised borrowing costs.

Debt markets are already flashing warning signs as investors grow wary.

Treasury Secretary Janet Yellen warned on Tuesday that a failure to raise the debt ceiling would trigger a “financial catastrophe” that would sharply raise the cost of borrowing money.

Manhattan Institute senior fellow Brian Riedl gives House Republicans a 50-50 chance of passing the legislation this week.

“The vast majority of Republicans are on board,” Riedl said. “But you have both moderate and conservative lawmakers trying to push it in competing directions.”

Some Republicans say it does not do enough to cut the deficit.

“At this moment, I’m a no,” Representative Nancy Mace told Reuters.

Others are pushing for tougher work requirements for social programs, or worry that proposed cuts to renewable-energy tax credits would hurt their home states.