House Republicans narrowly passed 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.
Biden has threatened to veto the Republican package, which has almost no chance of passing the Democratic Senate in the meantime, 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 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 Biden into talks. The two men could hardly be further apart on how to resolve the issue.
The bill passed 217-215.
"We've done our job," McCarthy said after the vote. "The president can no longer ignore" the issue and not negotiate with the House Republicans, he said.
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 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," 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 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, making post-midnight changes in the House Rules Committee in the crush to win over holdouts.
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 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 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 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 Biden to the negotiating table.
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 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:
- Claw back unspent COVID-19 funds.
- Impose tougher work requirements for recipients of food stamps and other government aid.
- Halt Biden's plans to forgive up to $20,000 in student loans.
- End many of the landmark 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.
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 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 McCarthy the lead, said the speaker has been able to unite the House Republicans.
Now, he 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."