McCarthy under pressure after debt deal with Biden
Republican hardliners claim Democrats had it easy and call for vote on ousting house speaker
US House Speaker Kevin McCarthy has dismissed threats from Republican hardliners to oust him over the debt-limit deal he forged with President Joe Biden and expressed confidence that lawmakers will pass legislation in time to avert auts default.
The bill, heading for a House vote overnight, has prompted Republican congressman Dan Bishop to call for a vote on removing McCarthy as speaker, claiming that the deal granted too many concessions to Democrats.
Another conservative member, Chip Roy, promised a “reckoning” for McCarthy, and called the deal a “turd sandwich”.
Asked if he was worried he would lose his job as speaker, McCarthy responded “nope”. Supporting the deal was “an easy vote for Republicans”, he said.
Despite the Republican objections, the bill cleared a crucial hurdle on Tuesday night when the powerful House Rules Committee voted 7-6 to advance the bill.
The legislation would set the course for federal spending for the next two years and suspend the debt ceiling until January 1, 2025 – postponing another fight over borrowing until after the presidential election.
Biden and McCarthy have said the measure would pass, and each spent much of the Memorial Day holiday lobbying members of their respective parties.
In exchange for Republican votes for the suspension, Democrats agreed to cap federal spending for the next two years. The White House interpretation of the caps has it telling lawmakers the deal would lower spending by about US$1 trillion over a decade, while the Republican Party argues the spending cut is double that.
The non-partisan Congressional Budget Office estimated that the bill would cut deficits by US$1.5 trillion over 10 years.
The bill needs 218 votes in the House, with Republican leadership relying on Democratic support as they brace for up to 60 of their 222 members defecting. Falling short would politically weaken the speaker.
Across the full House, there are at least 17 Republican “no” votes.
Most hardline conservatives have stopped short of publicly calling for McCarthy’s ouster, though at least one other conservative hinted at retaliation during a press conference at the Capitol by the ultraconservative House Freedom Caucus. The group is demanding deeper cuts in federal spending.
“No matter what happens, there is going to be a reckoning,” Roy, a Texas Republican, said on Tuesday, adding that Republican lawmakers had been “torn asunder” by the agreement.
House passage would send the bill to the Senate. The measure needs congressional approval before June 5, when the Treasury Department could run out of funds to pay its debts for the first time in US history.
United States President Joe Biden and Republican House speaker Kevin McCarthy appear to have reached a deal over the so-called debt ceiling that threatened a sovereign default for the world’s richest country. The two sides may have avoided a selfinflicted calamity, but it will come at a significant cost as foreign countries and investors are left flabbergasted by the domestic political dysfunction of the United States. Republicans have made the fight about excessive borrowing by the government, never mind that borrowing was already approved by Congress. This is down to a quirk in US law that requires a second congressional passage, which enables Republicans to exploit it to force cuts on unrelated, nonmilitary spending such as social welfare and education.
The fiscal fiasco has had the whole world on the edge of its seat because US Treasuries and bonds are among the most liquid financial assets and have long been considered risk-free, at least until recently. As long as they enjoy pristine credit ratings and remain liquid, they provide “safe” investment opportunities. That is why exporting nations such as China and Japan have traditionally put vast amounts of US dollars into the Treasuries market, which in turn help “finance” US borrowings at low rates.
Not surprisingly, thanks to Washington’s increasingly hostile posture and domestic political infighting, Beijing has been scaling back on owning US Treasuries. China, of course, is not the only one. Allies are alarmed by Washington’s mishandling of the US dollar hegemony, while less friendly nations now actively seek alternatives to untangle themselves from US financial dominance.
The Republicans do have a point; the long-term sustainability of US debt is important. But the way they go about it misdirects public attention. While China has been reducing its reliance on exports and bolstering its domestic consumption, the US continues with its debt-fuelled growth. Unprecedented increases in US military spending and tax cuts delivered by former Republican presidents are unsustainable. The debt is unsound not because it is huge per se, but because it favours the rich and powerful, the military and the corporate at the expense of the welfare of ordinary citizens.