US House Speaker Kevin McCarthy (R-CA) is racing against time trying to get fellow Republicans on board to back his bill raising the federal government's $31.4 trillion debt ceiling.
The California Republican hopes to have his package stipulating a $1.5 trillion increase in the nation's debt ceiling pass the House of Representatives next week. But bearing in mind the razor-thin majority that the GOP has in the House, indications of steep dissent within his own rank-and-file could make this a tough test for the speaker.
McCarthy has proposed allowing more government debt, but only linked with tough spending compromises, including steep budget cuts. The speaker projected confidence on Thursday, telling reporters:
"We're in very good shape. We just rolled it out yesterday. We're working, talking through all the members."
He added, “I want you to write stories like I’m teetering whether I could win or not and the whole world hangs in the balance. And then I want you to write a story after it passes, did the president sit down and negotiate?”
Earlier in the year, the newly-inaugurated Republican-controlled House refused to pass a new bill raising the spending limit. Spending cuts were proposed by the GOP as a precondition for passing a new bill with a higher debt ceiling. But the Democrat leadership rejected the proposals.
“Without exaggeration, American debt is a ticking time bomb that will detonate unless we take serious, responsible action. Yet how has President Biden reacted to this issue? He has done nothing,” McCarthy fumed.
Warning that a "no-strings-attached debt limit increase will not pass,” McCarthy proposed a bill that would slash federal spending to 2022 levels and impose a 1% cap on annual budget growth over the next decade. However, on Thursday, some House Republicans were still clinging to their apprehensions about the McCarthy-proposed package.
Three Camps of GOP 'Doubters'
Those apprehensive of the bill set to be introduced by House Budget Chairman Jodey C. Arrington, R-Texas, have been urging tweaks to it.
Don Bacon, a Republican serving as the US representative for Nebraska's 2nd congressional district, who said he personally supported the proposed legislation, told reporters that others in the GOP ranks were "struggling" with it. If the vote were held on Thursday, it might not pass, he claimed. However, if House Republicans fail to pass the bill, he said, "There's going to be a lot of pressure to just capitulate" to Democrats arguing for an increase in borrowing authority without any spending cuts.
After a closed-door meeting with GOP leaders on Tuesday, one Republican lawmaker told US media on Tuesday that, "This is the single biggest point of leverage that will exist in these two years."
There are reportedly at least three such "camps" of doubters. First, there are those who think it does not go far enough in reigning in federal deficits. Representative Chip Roy, a member of the House Rules Committee, doesn't think the spending cuts are "robust enough."
Several others who have spoken with US media indicated they felt the bill “should go further,” that they were “in favor of very aggressive cuts” and “really want to see some real restraints and fiscal cuts, not just promises.” US Rep. Andrew Biggs (R-AZ) said McCarthy’s proposed cuts are a “long ways away” from the demands McCarthy made just weeks ago in negotiations with the administration of Democratic POTUS Joe Biden.
Others reportedly fear damaging potential consequences for their own constituents, like in the case of Representative Nancy Mace. Concerned that the proposals incorporated in the bill to roll back tax credits linked to solar energy could hit her South Carolina constituents, she said:
"There are just some concerns there's no plan to balance the budget ... in any time frame and this is an opportunity to do that."
Similarly, Representative Tim Burchett, worried about his Tennessee district which includes Knoxville. The city has a poverty rate of about 21%, and the proposed tightening of eligibility for the SNAP food stamp program is a concern for him.
Finally, some have simply never voted for a debt limit increase.
What Happens if Debt Ceiling is Not Raised?
The debt ceiling is the total maximum amount of money that the United States government is authorized to borrow to meet its existing legal obligations, such as Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments. To make up the difference between the money that the US federal government spends, typically more, and the revenue it takes in, it relies on the simple process of borrowing money. It's an easy guess that this debt gradually increases overtime. But there is a limit to this - a law dating back to 1917 set in place a debt ceiling. As breaching the debt limit may result in a default for the government, whenever the US has approached the debt limit, Congress has voted to raise or suspend the debt ceiling.
In February, the Congressional Budget Office issued its financial forecast, warning that the US government would be unable to meet its financial obligations if Congress fails to raise the debt ceiling by summer. Secretary of the Treasury Janet Yellen also warned that if the government were to default on its debt, it could lead to a recession.
Meanwhile, financial markets have already succumbed to debt ceiling jitters. The cost of insuring US debt against default for one year reached over 100 basis points as of Wednesday, according to Refinitiv data.
The White House slammed Kevin McCarthy's plan, with Press Secretary Karine Jean-Pierre saying, "MAGA House Republicans are holding the American economy hostage in order to take a hatchet to programs Americans rely on every day to make ends meet."