“We’ve done our job,” House Speaker Kevin McCarthy (R-CA) told reporters yesterday after 217 Republicans votes to pass legislation that would increase the debt limit into next year, cut trillions in federal spending and enact a number of other conservative policy changes.
Only the job isn’t done. The House bill will go nowhere in the Senate and still leaves massive uncertainty over how the debt limit ultimately gets raised, as it must before long.
What Republicans are celebrating: “Since the bill in question is absolutely dead on arrival in the Senate and at the White House, the celebrating is actually about Kevin McCarthy’s Speakership surviving for another day, and right-wing members flexing their power,” writes Ed Kilgore at New York.
There may be just a bit more to it. “McCarthy also secured an extremely useful talking point,” write Jake Sherman and John Bresnahan at Punchbowl News. “No matter how right-leaning and unrealistic the 320-page package is, House Republicans are the only ones to have passed legislation to lift the nation’s borrowing cap. McCarthy plans now to sit, pat and slam Senate Majority Leader Chuck Schumer for doing nothing and President Joe Biden for refusing to negotiate.”
Biden faces a big decision: It’s not clear that Biden will change his tune on debt talks. The president has insisted that he will not negotiate over raising the debt limit, though he is willing to talk to McCarthy about spending in the context of the federal budget. But he will face increasing pressure, including some from within his own party, to engage with McCarthy now.
“He will need to find what, if any, common ground on spending cuts he has with Republicans, who do not share his preference for reducing the nation’s debt path largely by raising taxes on corporations and the rich. He will need to determine if he is prepared to sign any debt limit increase that is attached to conditions demanded by House conservatives,” Jim Tankersley writes at The New York Times.
There’s a principle, and politics, involved: “Mr. Biden and his aides do not want to encourage Republicans to habitually threaten economic collapse under Democratic presidents — and only under Democratic presidents — by allowing them to extract concessions to raise the limit now,” Tankersley adds. “They also recognize that a recession set off by default would hammer American families just as Mr. Biden is ramping up his re-election campaign, a dangerous scenario for an unpopular incumbent no matter which party voters blame for the default.”
So Biden may have to agree to talks: “Mr. Biden’s insistence that House Republicans pass a clean debt limit increase without any strings attached is the morally and economically correct course of action,” The Washington Post’s editorial board says. “But reality has to sink in. It would be wise for Mr. Biden to start talking seriously with Mr. McCarthy. Budget talks can remain on a separate path, but they need to commence.”
What a deal could look like: Tankersley reports that some administration officials privately suggest that spending caps lasting for just a few years rather than the decade in the GOP bill could maybe, possibly form the core of an agreement that would raise the debt limit and fund the government. And Punchbowl notes that McCarthy wants spending caps, energy permitting reform and stricter work requirements for federal benefit programs in a final deal with the White House and Senate. “That’s going to be very tricky if the California Republican ever gets into a real negotiation with Biden and Schumer,” Sherman and Bresnahan suggest. “Did House GOP leaders raise the bar too high by passing this package? Only time will tell.”
Given that some House Republicans won’t accept any plan other than the one they just voted for, a potential deal with smaller spending cuts and a shorter timeframe would require bipartisan support to pass — and it could mean trouble for McCarthy.
McCarthy is still in a perilous position: The speaker may have gotten a big win this week, but he remains at the mercy of his members. “Any bloc of at least five members has the leverage to extract concessions from McCarthy, who can only afford to lose four votes on most bills,” Juliegrace Brufke notes at Axios. “Freedom Caucus firebrands created this template during the speaker election, and McCarthy cut deals that showed his vulnerability and pragmatism in one swoop. … But those promises may come back to haunt him.”
Time is running short: Goldman Sachs economist Alec Phillips told clients Wednesday evening that surprisingly strong tax receipts for the Treasury Department mean that the probability of an early June deadline to raise the debt limit has been reduced. The most likely deadline is now in late July, Phillips said. That’s not as far away as it may seem, given that the House is out of session next week and Biden is scheduled to travel to Australia and Japan after that.