House Republicans pass U.S. debt bill, push Biden on spending

Speaker of the House Kevin McCarthy arrives for a meeting with fellow Republicans at the Capitol

By LISA MASCARO and KEVIN FREKING

Associated Press

April 26, 2023 3:41 PM PT

WASHINGTON — 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 Biden to negotiate and prevent a catastrophic federal default this summer.

Biden has promised to veto the Republican package, though it has almost no chance of passing the Democratic Senate, and the president has so far refused to negotiate over the debt ceiling that the White House insists must be lifted with no strings — as had been customary for years — to ensure America pays its bills.

But McCarthy’s ability to swiftly unite his slim majority and bring the measure to passage over opposition from Democrats and holdouts in his own party gives currency to the Republican speaker’s threat to use the vote as an opening bid forcing 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,” McCarthy (R-Bakersfield) said after the vote.

“The president can no longer ignore” the issue by not not negotiating with the House Republicans, he declared.

As the House debated the measure, Biden on Wednesday indicated he was willing to open the door to talks with McCarthy, but not on preventing the nation’s first default, which would shake the economy of the U.S. and beyond.

“Happy to meet with McCarthy, but not on whether or not the debt limit gets extended,” 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 weeks-long political slog as the president and Congress try to work out a compromise that would allow the nation’s debt cap, 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 raising the debt ceiling was once a routine matter in the House. But the House Republican majority hopes to maneuver 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.

McCarthy worked nonstop to unite his fractious Republican majority, the “five families” — including the right-flank Freedom Caucus and others — making post-midnight changes in the Rules Committee in the push 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 Biden — a law many of them voted against — 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 more quickly launch the bolstered work requirements for recipients of government aid, starting in 2024 as proposed by another holdout, Freedom Caucus member Rep. Matt Gaetz (R-Fla.), who has led previous challenges to McCarthy.

Republicans hold a five-seat House majority and faced several absences this week, leaving McCarthy with almost no votes to spare. In the end, the speaker lost four Republican votes, and all Democrats opposed the bill.

“This bill is unacceptable, it’s unreasonable, it’s unworkable, it’s unconscionable — and it’s un-American,” said 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 McCarthy worked to shore up support, some of the most right-leaning rank-and-file Republican members who have never voted for a debt ceiling increase said they were preparing to do just that, rallying behind the speaker’s strategy to push Biden to the negotiating table.

Rep. Ralph Norman (R-S.C.), a member of the Freedom Caucus, said he “wanted double” the deficit reductions 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 a 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 in the meantime, but funding is expected to run out this summer. Economists warn that even the serious threat of a federal debt default would send shock waves 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:

Eliminate unspent COVID-19 funds.
Impose stricter work requirements for recipients of SNAP benefits, formerly known as food stamps, and other government aid.
Halt Biden’s plan to forgive up to $20,000 in student loan debt.
End many of the renewable energy tax breaks 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 McCarthy’s strategy and bolster his hand in talks with 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” votes.

Rep. Andy Biggs (R-Ariz.), the former chairman of the Freedom Caucus, said he had wanted Republicans to do more to end deficit spending. Tim Burchett (R-Tenn.) 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 Charles E. Schumer (D-N.Y.) said that House passage of the legislation would be a “wasted effort” and that 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 (R-Ky.), who stepped aside to give McCarthy the lead, noted that the speaker has been able to unite House Republicans.

Now, McConnell said, Biden and McCarthy must come to agreement. Otherwise, he said, “we’ll be at a standoff. And we shouldn’t do that to the country.”

Associated Press writers Josh Boak, Mary Clare Jalonick and Farnoush Amiri contributed to this report.