Debt-ceiling vote poses a test for Republican U.S. House Speaker McCarthy

Republican members in the U.S. House of Representatives will try to get 218 votes to cut spending and raise the $31.4 trillion debt ceiling to start discussions with President Joe Biden.

Speaker Kevin McCarthy is trying to rally his 222-member majority to support the $1.5 trillion borrowing limit increase. If 213 Democrats opposed it, five Republican “no” votes would kill it.

Republicans hope a united front would compel Biden to negotiate after a months-long deadlock. Biden wants Congress to lift the debt ceiling without conditions, as Trump did three times.

Washington and Wall Street are fixated on the “X-date,” possibly weeks away, when Congress must act or the U.S. Treasury would default and destabilize the world economy.

On Tuesday afternoon, the House Rules Committee, a legislative gatekeeper, will consider the bill. Wednesday’s House floor vote might follow that panel’s approval.

In 2011, the U.S. credit rating was downgraded, shaking financial markets and raising borrowing rates. Financial analysts believe lawmakers’ deadline might be early June.

The worst-case scenario is that they don’t get the votes this week, the deadline is June 15, and we have a month to get things done. Rohit Kumar, co-leader of PwC’s Washington national tax office, said that scenario brings the most risk.

“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.”

As investors become apprehensive, debt markets are warning. Investors anticipate a Treasury Department “X-date” forecast in the coming weeks.

HOW MANY ‘NO’?
The bill has been criticized by Republicans including Andy Biggs, Tim Burchett, and Nancy Mace for not cutting the deficit enough. Some worry that cutting renewable energy tax credits might affect their own states.

“At this moment, I’m a no,” Mace stated in an interview. “We’re putting our children and grandchildren in a worse economic situation by not addressing our spending issues.”

Monday’s White House plea for a debt-ceiling increase was unqualified.

“We have been very clear: There will not be any negotiation around the debt ceiling,” Press Secretary Karine Jean-Pierre said. “This is their constitutional duty.”

Representative Kevin Hern, who chairs the 175-member conservative Republican Study Committee, said he believed McCarthy could pass the legislation and force Biden and his Democratic supporters in Congress to negotiate.

“Speaker McCarthy will have meetings until the last minute, and he will do what’s needed to get it passed,” Hern told Reuters. “Like all speakers, he can negotiate with members.”