House Republicans narrowly passed sweeping legislation Wednesday that would raise the government’s legal debt ceiling by $1.5 trillion in exchange for steep spending restrictions, a tactical victory for Speaker Kevin McCarthy as he challenges President Joe Biden to negotiate and prevent a catastrophic federal default this summer.
Mr. Biden has threatened to veto the Republican package, which has almost no chance of passing the Democratic Senate anyway, and the president has so far refused to negotiate over the debt ceiling, which the White House insists must be lifted with no strings to ensure America pays its bills.
But Mr. McCarthy’s ability to swiftly unite his slim majority and bring the measure to passage over opposition from Democrats and even holdouts in his own party gives currency to the Republican speaker’s strategy to use the vote as an opening bid forcing Mr. Biden into talks. The two men could hardly be further apart on how to resolve the issue.
The bill passed by a razor-thin 217-215 margin.
“We’ve done our job,” Mr. McCarthy said at the Capitol after the vote.
“The president can no longer ignore by not negotiating,” he said. “Now he should sit down and negotiate.”
As the House debated the measure, Mr. Biden on Wednesday indicated he was willing to open the door to talks with Mr. McCarthy, but not on preventing a first-ever U.S. default that would shake America’s economy and beyond.
“Happy to meet with McCarthy, but not on whether or not the debt limit gets extended,” Mr. Biden said. “That’s not negotiable.”
Passage of the sprawling 320-page package in the House is only the start of what is expected to become a weekslong political slog as the president and Congress try to work out a compromise that would allow the nation’s debt, now at $31 trillion, to be lifted to allow further borrowing and stave off a fiscal crisis.
The nation has never defaulted on its debt, and the House Republican majority hopes to maneuver Mr. Biden into a corner with its plan to roll back federal spending to fiscal 2022 levels and cap future spending increases at 1% over the next decade, among other changes.
Mr. McCarthy worked nonstop to unite his fractious Republican majority, the “five families,” including the conservative Freedom Caucus and others, making post-midnight changes in the House Rules Committee in the crush to win over holdouts.
Facing a revolt from Midwestern Republicans over doing away with biofuel tax credits that were just signed into law last year by Democrat Mr. Biden, GOP House members relented and allowed the tax credits to stay on the books in their bill.
“Our delegation has stood united for Iowa’s farmers and producers fighting to amend the bill to protect biofuels tax credits,” said the four House Republicans from Iowa in a joint statement announcing their support for the bill.
Republicans also agreed to quickly launch the bolstered work requirements for recipients of government aid, starting in 2024 as proposed by another holdout, Freedom Caucus’ Rep. Matt Gaetz, R-Fla. – who has led previous challenges to Mr. McCarthy and ultimately voted against the bill.
Republicans hold a five-seat House majority and faced several absences this week, leaving Mr. McCarthy with almost no votes to spare. In the end, the speaker lost four Republican no votes, and all Democrats opposed.
“This bill is unacceptable, it’s unreasonable, it’s unworkable, it’s unconscionable – and it’s un-American,” said the Democratic leader Hakeem Jeffries of New York. “That’s why we oppose it.”
Democrats derided the Republican plan as a “ransom note,” a “shakedown” and “an unserious bill” that was courting financial danger.
But as Mr. McCarthy worked to shore up support, some of the most conservative rank-and-file Republican members who have never voted for a debt ceiling increase in their quest to slash spending said they were preparing to do just that, rallying behind the speaker’s strategy to push Mr. Biden to the negotiating table.
Rep. Ralph Norman, R-S.C., a member of the Freedom Caucus, said he “wanted double” the deficit savings contained in the bill but would vote for it “because it starts the ball, it gets us in the arena to solve the debt problem.”
It’s the first big test for the president and the Republican speaker, coming at a time of increased political anxiety about the ability of Washington to solve big problems amid the need to raise the federal debt limit in a matter of weeks.
The Treasury Department is taking “extraordinary measures” to pay the bills, but funding is expected to run out this summer. Economists warn that even the serious threat of a federal debt default would send shockwaves through the economy.
In exchange for raising the debt limit by $1.5 trillion into 2024, the bill would roll back overall federal spending and:
- Claw back unspent COVID-19 funds.
- Impose tougher work requirements for recipients of food stamps and other government aid.
- Halt Mr. Biden’s plans to forgive up to $20,000 in student loans.
- End many of the landmark renewable energy tax breaks Mr. Biden signed into law last year. It would tack on a sweeping Republican bill to boost oil, gas, and coal production.
A nonpartisan Congressional Budget Office analysis estimated the Republican plan would reduce federal deficits by $4.8 trillion over the decade if the proposed changes were enacted into law.
Several Republicans from the party’s right wing, eager for even stricter spending cuts, said the bill was at least a starting point as they prepared to vote for Mr. McCarthy’s strategy and bolster his hand in talks with Mr. Biden.
Freshman Rep. Derrick Van Orden, R-Wis., said: “It’s our obligation to get Speaker McCarthy to the table.”
Others though, remained noncommittal or flat-out no’s.
Rep. Andy Biggs, the former chairman of the Freedom Caucus who voted against the bill, said he had wanted Republicans to do more to end deficit spending. Tim Burchett, R-Tenn., also a “no” vote, said of the nation’s nearly $32 trillion in debt, “that’s my major concern.”
In the Senate, leaders were watching and waiting.
Senate Majority Leader Chuck Schumer said House passage of the legislation would be a “wasted effort” and that Mr. McCarthy should come to the table with Democrats to pass a straightforward debt-limit bill without GOP priorities and avoid default.
Senate Republican leader Mitch McConnell, who stepped aside to give Mr. McCarthy the lead, said the speaker has been able to unite the House Republicans.
Now, he said, Mr. Biden and Mr. McCarthy must come to an agreement. Otherwise, he said, “We’ll be at a standoff. And we shouldn’t do that to the country.”
In a statement late Wednesday, the White House press Secretary Karine Jean-Pierre said congressional Republicans “must act immediately and without conditions to avoid default. … That is their job.”
This story was reported by The Associated Press. AP writers Josh Boak, Mary Clare Jalonick, and Farnoush Amiri contributed to this report.