McCarthy's debt-ceiling bill tests unity of U.S. House Republicans

[April 26, 2023]  By Richard Cowan

WASHINGTON (Reuters) - The U.S. House of Representatives could as early as Wednesday vote on a bill to sharply cut spending for a decade in exchange for a short-term hike in the debt ceiling, though it was unclear if it had enough support in the Republican majority to pass.

In the early morning hours on Wednesday, the House Rules Committee approved terms of debate for the bill on a partisan vote, a last step before sending it to the full House chamber, which could debate it either later in the day or later this week.

The panel's action came after a prolonged Tuesday meeting that spilled into Wednesday. It was interrupted by an extended recess to allow Republicans to work out last-minute changes to the bill and thus improve chances of passage in the Republican-controlled House.

The result was that Republicans removed a provision that would have ended a tax credit for biofuels that was part of Democratic President Joe Biden's climate change initiatives in the 2022 "Inflation Reduction Act." Several House Republicans, particularly from Midwest states, had rebelled against that provision.

Bending to the far-right wing of the party, Republicans also accelerated some new, tougher work requirements for receiving Medicaid healthcare benefits for the poor.

"The new plan is even more draconian...even more mean. Kicking poor people off of healthcare wasn't enough. They now want to do it faster," said Representative Jim McGovern, the senior Democrat on the committee.

Before advancing the bill, Democrats failed to get permission to offer several amendments on the House floor, including one that would have prevented any future cuts to veterans' benefits, such as programs for suicide prevention, housing assistance and healthcare.

The full House vote will be a test of House Speaker Kevin McCarthy's leadership. He has argued that passing the bill could force Biden to agree to negotiate spending cuts in exchange for lifting the federal government's $31.4 trillion borrowing limit.

House Republicans are offering to increase Washington's borrowing authority by $1.5 trillion or until March 31, whichever comes first. Furthermore, the bill would pare spending to 2022 levels and then cap growth at 1% a year, repeal some tax incentives for renewable energy and stiffen work requirements for some antipoverty programs. Even if it passes the House, it is not seen winning approval in its current form in the Democratic-controlled Senate.
 

House Speaker Kevin McCarthy (R-CA) and other House Republicans hold a news conference on Capitol Hill in Washington, U.S., April 20, 2023. REUTERS/Amanda Andrade-Rhoades/File Photo

Meanwhile, several House Republicans have voiced opposition to the bill for a variety of reasons, some saying that it does not cut spending enough, others worried that it would take a heavy toll on their home districts. McCarthy can afford to lose only four votes from his narrow 222-213 majority if the bill is to pass.

"Remember what this bill is. This bill is to get us to the negotiating table. It’s not the final provisions," McCarthy told reporters late Tuesday.

The stakes are high: A long 2011 debt-ceiling standoff led to a downgrade of the U.S. government's credit rating, which pushed borrowing costs higher, and Wall Street is already flashing warning signs.

The White House has called on Congress to raise the debt limit without conditions, as it did three times under Biden's Republican predecessor, Donald Trump.

Lawmakers do not know precisely how much time they have left to act. The "x-date" when the Treasury Department would no longer be able to pay all its bills could come as early as June or stretch later into summer.

REPUBLICAN DISSENT

Some Republicans, including Nancy Mace of South Carolina, expressed reservations with the bill, saying it does not go far enough in lowering spending and could hurt her state's solar industry. Similarly, Andy Biggs of Arizona said, "I am dubious about Speaker McCarthy's debt ceiling proposal."

Democrats argue that realistically, the Republican plan would bring an estimated 22% reduction in many social support programs because the military would likely be exempted from spending caps in separate spending bills to be written this spring and summer.

Democrats also argue that the proposed tradeoff of ten years of spending cuts is unreasonable for an increase in the debt ceiling that would trigger another potentially painful round of negotiations early next year, just as the presidential campaign heats up.

"Ten years of cuts for less than one year of preventing a default," said Democratic Representative Rosa DeLauro. "In less than a year we will be back here again."

(Reporting by Richard Cowan and David Morgan, additional reporting by Katharine Jackson; Editing by Scott Malone and Nick Macfie)

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