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Republicans ready debt ceiling bill amid new fears of June deadline

ByTeam BB

Apr 18, 2023

House Republicans are preparing to begin debate as soon as next week on a bill to raise the debt ceiling temporarily and slash federal spending, even though simmering internal tensions — and a fast-approaching, uncertain deadline — threaten to upend their plans.

The new timeline appears to put the party on an accelerated collision course with the White House, and it further raises the odds of a fiscal crisis, after a report from Goldman Sachs warned that Washington may have only until early June to take action and avert a catastrophic government default.

In a bid to rally GOP lawmakers, McCarthy unfurled his latest thinking at a private conference meeting Tuesday morning. A day after selling his plan to Wall Street, the House speaker presented options for raising the debt ceiling — the legal maximum that the U.S. government can borrow to pay its bills — potentially until some time in 2024.

In exchange, McCarthy said, the forthcoming GOP proposal would couple any increase with a slew of other Republican priorities. That includes federal spending reductions that could total $130 billion; a termination of President Biden’s top policies, such as student debt cancellation; and a set of new rules requiring the recipients of federal aid, including Medicaid, to work in exchange for benefits.

Republicans generally have supported McCarthy’s strategy, believing it could put new political pressure on Biden, who has called on lawmakers to raise the debt ceiling without conditions. But early, internal schisms still emerged around the unresolved, finer details of McCarthy’s plan, complicating its path to swift passage in a chamber where his fractious party has only four votes to spare.

“I don’t know when this legislative package the speaker talked about today is coming to the floor, because I don’t know when it’s going to have 218 votes,” said Rep. Matt Gaetz (R-Fla.), a member of the far-right House Freedom Caucus, referring to the number of votes required for legislation to pass.

Asked if the bill currently had sufficient support, he continued: “No, because it doesn’t exist in writing yet. We still have to resolve major questions, like the dollar amount and the duration and the policy concessions we seek from the Senate.”

The uncertainty carried especially stark significance on a day when analysts estimated the U.S. may run out of special budgetary measures to continue paying its bills as soon as June. A report issued by Goldman Sachs said that tax receipts so far suggest an “increased probability” the deadline could arrive in the first half of the month, though they cautioned there is a “slightly greater chance” of July.

In its own estimates, the U.S. government has said the deadline could fall between June and September. No matter the timeframe, though, top economists have raised alarms that Republicans’ demands threaten to push the country to the fiscal brink — triggering a government default that could rattle global markets, thrust millions of Americans out of their jobs and precipitate another recession.

With the clock ticking, though, Republican leaders on Tuesday tried to present a calm, unified front.

“I’m confident we’ll get something done,” said Rep. Tom Emmer (R-Minn.), the party’s chief vote counter in the House.

Democrats and Republicans alike are responsible for the nation’s growing federal debt, which now stands at $31 trillion. In the past, the two parties have banded together repeatedly to raise or suspend the limit, including three such occasions during President Donald Trump’s term.

Citing that history, Democrats have blasted GOP lawmakers as hypocrites for trying to seize on the critical fiscal deadline now for political leverage in a time of divided government. But McCarthy has led Republicans in rejecting those criticisms, stressing they are not willing to raise the debt ceiling without conditions — while demanding that Biden come to the negotiating table.

“Debt limit negotiations are an opportunity to examine our nation’s finances,” McCarthy said Monday in a speech at the New York Stock Exchange, later adding: “A no-strings-attached debt limit increase will not pass.”

But a protracted stalemate still threatens to harm the U.S. economy. A similar GOP-led standoff more than a decade ago sank the stock market and brought a costly downgrade in the government’s credit rating, costing U.S. taxpayers more than $1 billion in higher interest.

For now, Republicans have forged ahead with their own measure, hoping to put down a political marker in the debate. McCarthy has not released any actual legislation, a reflection of the ongoing work behind the scenes to craft a bill that can unite the GOP’s sparring camps.

“What you put out there as your opening, defining thing, is what’s going to define the narrative,” said Rep. Chip Roy (R-Texas), a member of the House Freedom Caucus, describing the next few days as an “important and difficult task that we have to accomplish”

Privately, McCarthy presented his conference with a series of options Tuesday morning, including a one-year suspension of the debt ceiling or an increase by a specific amount that might cover a longer period of time, according to a House leadership aide, who spoke on condition of anonymity to describe private deliberations. Yet Republicans remain torn on exactly what to include in a bill as their opening offer to the Senate, which Democrats control.

“I think we are very close if not there yet,” said Rep. Stephanie Bice (R-Okla.), who sits on the chamber’s appropriations and budget panels. Noting there has been “positive momentum,” she added: “The devil’s in the details, and there are still some details to be hashed out.”

Other critical details remain unresolved, including which work requirements Republicans hope to impose on the recipients of federal anti-poverty benefits. Some GOP lawmakers have eyed Medicaid, while others have set their sights on food stamps. In either case, Republicans aim to force people to work longer hours in exchange for financial assistance — a move that threatens to remove millions of Americans from the programs.

“We still have questions about work requirements,” acknowledged Rep. Nancy Mace (R-S.C.), stressing that Republicans need a strong bill because they “want to have as much leverage as possible” in any talks with the Senate.

Republicans have rejected imposing stricter work requirements on families with dependents between ages 7 and 18, an idea floated by Rep. Dusty Johnson (R-S.D.) for the food stamp program. Such a move could have denied benefits to 4 million children, according to the Center for Budget and Policy Priorities, a liberal-leaning group. McCarthy omitted that idea because it didn’t have widespread support within the conference, according to a Republican lawmaker who spoke on the condition of anonymity to discuss internal deliberations.

Meanwhile, a growing roster of Republicans have sought to add other policy items, including a repeal of the Inflation Reduction Act — a centerpiece of Biden’s agenda that Democrats enacted last year. Others have targeted the recent, roughly $80 billion boost to the IRS budget, money meant to help the government crack down on tax cheats. Republicans say the funds open the door for audits targeting average Americans. A bill to repeal the money passed the House earlier this year but is stalled in the Senate.

Behind the scenes, Rep. Kevin Hern (R-Okla.), the head of the Republican Study Committee, the largest GOP bloc in the House, has pushed House leaders to revoke the two Democratic priorities, according to a person familiar with the matter, who requested anonymity to describe the deliberations. But Republicans run the risk that the repealing IRS funds could complicate the math behind their own bill, since an enhanced IRS would help raise revenue — and a repeal would eliminate potential savings.

“I’m encouraged by the member engagement this morning — there seems to be a consensus among the conference on a number of issues, including bills we have already passed, that should be included in our debt limit legislation,” Hern said in a statement. “There’s still hard work ahead of us, but I believe we can get 218 votes by the end of next week.”

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