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Speaker McCarthy preps Republican debt ceiling deal to draw Biden into talks

The package would limit future federal spending increases to 1% a year, a proposal that has almost no chance in the Democratic-controlled Senate

Speaker of the House Kevin McCarthy
Speaker of the House Kevin McCarthy holds an event to mark 100 days of the Republican majority in the House, at the Capitol in Washington, on April 17, 2023.J. Scott Applewhite (AP)

Speaker Kevin McCarthy convened House Republicans behind closed doors Tuesday to build support for his plan to allow the nation’s debt limit to rise in return for strictly limiting future federal spending increases to 1% a year. It’s a bid, including other major policy changes, to draw President Joe Biden into negotiations.

The typically fractured House Republican majority has appeared surprisingly open to the plan, which McCarthy outlined in a high-profile speech Monday on Wall Street, but it remains a work in progress. While the proposal has almost no chance of passage in the Democratic Senate, McCarthy wants to pass it in the Republican House to kickstart White House talks.

“I’m confident we’ll have it and comfortable we’ll pass it,” said Representative Tom Cole, R-Okla., the chairman of the Rules Committee, who said a bill could come up for a vote as soon as next week.

Even some of McCarthy’s skeptics from the House Freedom Caucus — including those who initially refused to back him to be speaker — seemed ready to give his debt ceiling proposal a look. But others remained deeply skeptical, showing the limits of the embattled speaker’s grip on his majority.

Rep, Matt Gaetz, R-Fla., a McCarthy holdout for speaker, said Tuesday he was unsold on the plan and suggested changes.

And Representative Clay Higgins, R-La., said as he exited the session, “There is no ‘this.’ We’re discussing what the ‘this’ will be.”

The nation’s legal debt limit must be raised soon to keep the U.S. from defaulting on its fiscal obligations. That high-stakes fight will play out in the weeks ahead, as Biden confronts the new era of divided government with Republicans in charge of the House and eager to flex their majority power.

If McCarthy succeeds in having the House pass his proposal, he would be able to enter into talks with the White House showing that he has the backing of his fellow GOP lawmakers. Biden administration officials have privately expressed doubts about the benefits of negotiating with McCarthy out of skepticism that he can rally conservative Republican votes.

Democratic Minority Leader Hakeem Jeffries quipped on CNBC that the House Republicans’ budget plan is “in the witness protection program.”

The proposal the Republican speaker outlined is far-reaching, and expected to be rejected by the White House.

It would raise the debt limit into next year — putting it squarely into the 2024 presidential election in exchange for rolling back spending to fiscal 2022 levels, recouping tens of billions of dollars of unspent COVID-19 relief funds and imposing a 1% cap on future non-defense spending each year for the decade.

The 1 percent spending cap would not include mandated Social Security and Medicare money.

Additionally, McCarthy’s plan would impose new work requirements on recipients of government aid, cutting billions from the federal safety net. And it would tack on H.R. 1, a sweeping energy package of oil and gas drilling and permit changes that would undo much of Biden’s climate change agenda.

The Treasury Department has said the government probably will need to raise the debt ceiling, now at $31 trillion, by summer. For now, Treasury is taking “extraordinary measures” to allow continued borrowing to pay off already accrued bills, but that will eventually run out.

Unable to pass an actual Republican budget through the House, as Biden challenges him to do, McCarthy instead has been working furiously behind the scenes with his leadership team to unite the “five families” — the often warring factions of Republican caucuses including the House Freedom Caucus — to join together on his new plan. He and the leadership team discussed the ideas Tuesday at the House Republicans’ private session in hopes of turning the slides of ideas into a firm legislative package.

“I find all indications to be we’re going to put a very serious proposal on the floor and pass it with 218 or more votes,” said Freedom Caucus member Representative Dan Bishop, R-N.C., as lawmakers arrived at the Capitol late Monday evening, referring to the majority needed for passage.

But by Tuesday, no vote was set, according to a person familiar with the private meeting and granted anonymity to discuss it.

“I still have more questions than answers at this point,” said Representative Nancy Mace, R-S.C., complaining there were only a few slides of information.

In many ways, this is the easy part for McCarthy: A vote as soon as next week would hardly be binding since the proposal would be dead on arrival in the Senate.

That political dynamic may make it easier for McCarthy to rally his ranks behind the plan if Republicans see it as merely a starting point in negotiations designed to push Biden to the table.

House Freedom Caucus Chairman Representative Scott Perry, R-Pa., said late Monday the plan was a step in the right direction but he still needed details.

“Kevin McCarthy is going to get 218 votes on this deal,” said Representative Dusty Johnson, R-S.D., a chairman of the conservative Main Street Caucus, referring to the majority needed for passage.

Said Representative Kevin Hern of Oklahoma, the chairman of the powerful Republican Study Committee: “There’s still hard work ahead of us, but I believe we can get 218 votes by the end of next week.”

Senate Majority Leader Chuck Schumer said if McCarthy continues down this path of negotiating over the need to raise the debt limit, the U.S. would be headed for a default.

“No one should confuse this wish list as anything more than a recycling of the same bad ideas we’ve heard about for weeks, and it’s still not clear that Speaker McCarthy has the votes to even pass this,” Schumer said.

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