Speaker Kevin McCarthy passed his most difficult test yet on Wednesday, buying off holdout Republicans and forcing a measure with massive budget cuts through the House.
But the cost of showing his authority with a radical GOP conference was driving the country closer to the brink of fiscal default in an increasingly tense standoff with President Joe Biden.
The package, which increases the debt ceiling for a year in exchange for expenditure cuts, was intended to put additional pressure on Biden, who has refused to accept Republican requirements that would virtually kill his domestic agenda. The economy could crumble if the debt ceiling is not raised by the summer.
The speaker, who clearly despises Biden, jumped on the narrow vote to blame the president for any potential debt default. “The president can no longer jeopardise the economy.” “We lifted the debt ceiling, we did our job, and we are the only body that passed anything,” McCarthy added.
However, Biden, who launched his reelection campaign the day before, made it clear on Wednesday that he was not changing his stance, saying that while he was willing to talk with McCarthy about longer-term fiscal issues, raising the debt limit – a step that only Congress can take – was “non-negotiable.” According to the White House, Republicans are holding the economy hostage and cutting programmes that harm the American people.
Failure to pass the bill would have further harmed McCarthy’s speakership, which he needed to win in January after a farcical 15-round election process. However, after days of rigorous bargaining with rebel MPs, he demonstrated that he can at least wield his slim majority and unite his conference when the bill passed 217-215. Four Republicans voted against the bill, the maximum number of votes needed for it to pass.
Effective congressional leaders frequently have to offer incentives to members of their party in order to establish governing majorities on tough votes, and rushed rewrites of measures in the middle of the night – as happened in the early hours of Wednesday – are not rare.
However, the speaker’s substantial compromises on matters such as midwestern ethanol subsidies, which he made to gain the support, suggested that he is not a feared leader on his own side of the aisle. It sends the message that recalcitrant lawmakers can get substantial concessions in exchange for their votes. And McCarthy’s standing as speaker, which was already weakened after he made numerous compromises to hardliners in order to win the gavel, was weakened further when GOP leaders ruled out any revisions to the debt ceiling bill and then amended it.
This establishes a dangerous precedent in the debt ceiling dispute with Biden, because Wednesday’s measure was solely a messaging bill that would never pass the Democratic-controlled Senate and will accomplish nothing to resolve the problem. In the hypothetical scenario in which Biden and Senate Democrats agree to negotiate, any final plan would almost certainly include elements that many Republicans would oppose, casting doubt on McCarthy’s ability to enact essential legislation to preserve the economy in the midst of a national crisis. All that happened on Wednesday was that Republicans passed a useless bill after days of difficult negotiations. And it only passed by a hair’s breadth.
McCarthy’s victory will put pressure on Biden to modify his stance.
There is nothing wrong with Republican lawmakers attempting to achieve their vows to slash government expenditure by using mandates earned in a democratic election. However, many outsiders, especially those on Wall Street, wonder whether the debt limit, which may have terrible consequences if things go wrong, is a sensible area of leverage.
Unless Congress increases the government’s borrowing ability to pay for already agreed-upon spending, the United States may default on its commitments, plunging the economy into a tailspin and possibly into recession. The deadline may be as soon as the first week of June. Millions of Americans may lose their jobs or benefits, or their borrowing prices may rise. The fallout could sweep the world at a critical juncture in the economy and damage the United States’ enviable reputation as a financial safe haven.
Nonetheless, the political atmosphere shifted after McCarthy eventually passed his plan, which includes severe new work requirements that could dissuade Medicaid applicants and takes aim at Biden’s climate change initiative.
The president must now decide whether to continue to his position that, while he is willing to discuss a budget with McCarthy, he would not offer to any concessions in exchange for increasing the debt ceiling.
Biden stood firm during his press conference on Wednesday, the day before the election.
“I’m happy to meet with McCarthy, but not on whether the debt limit is raised or not.” “That is not negotiable,” stated Biden. “They often quote Reagan and Trump, both of whom said. … I’m paraphrasing: it would be a heinous crime not to raise the debt ceiling.”
However, the president must assess whether history’s lessons still apply after prior clashes in which Republicans suffered politically when they pushed the economy to the verge of collapse. Some Trump-era GOP lawmakers’ almost nihilistic fanaticism suggests that they are willing to risk the political and economic destruction of a default in order to avoid succumbing to Biden, which their constituents would regard as a humiliation. In these circumstances, Biden will have to consider whether, despite all of the political ramifications of handing the GOP a victory, the American people can bear the consequences of no resolution to this problem.
A default-induced stock market frenzy and a probable recession would be disastrous for the president’s reelection campaign next year. But if Biden caves to Republican demands now, he will not only alienate Democratic voters and destroy some of his first-term accomplishments, but he will also set a precedent that he can be browbeaten by extreme Republicans holding nuclear weapons.
McCarthy’s challenge on Biden has enormous stakes.
McCarthy and Biden are now embroiled in a high-stakes fight that might essentially decide their political careers, as each seeks to blame the other in this game of brinkmanship.
The Republican logic is that now that the House majority has passed a package raising the debt ceiling for a year in exchange for $4.8 trillion in deficit reductions over ten years, Americans will believe the GOP is the only party acting properly.
“Any president who refuses to negotiate does so at their own peril and to the detriment of the American economy,” one prominent McCarthy friend, North Carolina Rep. Patrick McHenry, told AWN’s Manu Raju before the vote.
However, there is no indication that Biden is willing to back down. And, while the Republican strategy makes logical from their perspective, it ignores the fact that the GOP controls only the House, while the Senate and the White House are in Democratic hands.
McCarthy makes further compromises.
McCarthy began moving votes overnight when it appeared for several days that the package would not be passed. South Carolina Rep. Nancy Mace, who had stated her opposition to the bill as recently as Wednesday morning, left from a meeting with the speaker saying she felt heard and ended up voting for it.
A source familiar with the conversation told AWN’s Raju that Mace will now draught a balanced budget amendment with McCarthy’s support. Mace, who recently warned the GOP that its hardline anti-abortion stances are alienating swing voters, will also get floor votes on a bill pertaining to women’s access to reproductive health and a bill dealing with active shooter warnings.
Meanwhile, a group of Republicans from Iowa and the Midwest negotiated the removal of a repeal of key tax advantages for biofuels such as ethanol from the initial wording. In addition, leadership agreed to expedite the implementation of proposed work requirements for Medicaid beneficiaries. That concession was made in order to secure the votes of Florida Republican Rep. Matt Gaetz and others. Gaetz, a staunch Trump supporter, ultimately voted no.
The leadership’s flexibility highlighted the importance they placed on the optics of GOP unity in adopting a package aimed to stymie Biden. And, flushed with victory after the vote, the speaker revelled in publicly chastising those who had questioned if he could pass it.
But his triumph may be fleeting. The House floor drama has done little to resolve the imminent debt ceiling catastrophe. In fact, it’s most likely made matters worse.
