WASHINGTON (Reuters) – Republican lawmakers who control the U.S. House of Representatives will be tested in coming days to muster the 218 votes needed to adopt a plan to slash spending while raising the government’s $31.4 trillion debt ceiling, a move they hope will jumpstart talks with President Joe Biden.
Their leader, Speaker Kevin McCarthy, is trying to hold together his narrow 222-member majority to back the bill, which would raise the borrowing limit by $1.5 trillion. Just five Republican “no” votes would doom it, if all 213 Democrats united in opposition.
The proposal has little chance of passing the Democratic-controlled Senate, but Republicans hope a show of unity would force Biden to negotiate after a months-long standoff. Biden has insisted Congress raise the debt ceiling without conditions, as it did three times under Republican President Donald Trump.
Washington and Wall Street are focused on the coming “X-date,” possibly just weeks away, when absent action by Congress the U.S. Treasury would no longer be able to pay all its bills, triggering a default that would shake the global economy.
The House of Representatives Rules Committee, a gatekeeper on legislation, will take up the bill on Tuesday afternoon. That panel’s approval could be followed by a House floor vote as early as Wednesday.
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. Lawmakers currently do not know their deadline, but financial analysts estimate it could come as soon as early June.
“The highest risk scenario is: they don’t have the votes this week, the deadline is before June 15 and now we’re really looking at a month to get things done. 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.
“If they fail, if they can’t pass something, then it clearly emboldens the Biden administration’s perspective of no negotiation, send us a clean debt limit increase.”
Debt markets are already flashing warning signs as investors grow wary. Investors expect the Treasury Department to offer a new “X-date” forecast in the coming weeks.
HOW MANY ‘NO’ VOTES?
Multiple Republicans, ranging from hardline Representative Andy Biggs to Tim Burchett and Nancy Mace, have raised concerns about the bill, saying it does not do enough to cut the deficit. Some have also raised concerns that cuts to programs providing tax credits for renewable energy programs would hurt their home states.
“At this moment, I’m a no,” Mace said in an interview. “We’re just putting our children and grandchildren in a more dire economic situation by not addressing the spending issues that we have today.”
The White House on Monday reiterated its call for Congress to raise the debt-ceiling without conditions.
“We have been very clear: There will not be any negotiation around the debt ceiling,” Press Secretary Karine Jean-Pierre said. “This is something that is their constitutional duty to do.”
Representative Kevin Hern, who chairs the 175-member conservative Republican Study Committee, said he was confident McCarthy would rally enough support to pass the legislation and pressure Biden and his Democratic allies in Congress to commence serious negotiations.
“Speaker McCarthy will have meetings until the last minute, and he will do what’s needed to get it passed,” Hern told Reuters. “He certainly understands how to negotiate with members, as every speaker does.”
Source: Economy - investing.com
