Kevin McCarthy’s Debt Ceiling Dilemma

Hi, it's Alexa Weibel from New York Times Cooking.

We've got tons of easy weeknight recipes.

And today, I'm making my vegetarian mushroom shawarma pitas. This recipe is just built for efficiency you toss your mushrooms and red onion in your spices, throw them in the oven. By the time they're done, you've chopped your cabbage and you're ready to assemble. It feels crazy that this takes just 20 minutes of active time.

From New York Times I'm Michael Barbaro. This is the Daily.

We did, we saw an early test balloon floated essentially, and it was on a really high-stakes issue, it was on the fight over raising the debt ceiling.

And just remind us of the basics of that fight. I know it is a complicated subject, a slightly academic subject, but just walk us through it.

At some point over the summer, we don't know exactly when, but we're estimating maybe by June. The government is going to hit the limit of how much money it can borrow in order to fund government operations. And so Congress is going to have to pass, and then the White House is going to have to sign a bill raising that limit. If Congress doesn't raise the debt ceiling, the United States can't borrow anymore and the government stops working, it can't pay its bills.

Right, which is why the government raises the debt ceiling time after time, after time. Because everybody of both parties traditionally is pretty invested in making sure the government can pay its bills and that it doesn't default on its debt.

That's right. A default would invite catastrophic economic consequences.

Right? Would McCarthy, as speaker, be able to persuade all these Republicans, especially these conservative Republicans, to get on the same page? Or would it devolve into the kind of ugly spectacle we saw surrounding his election as speaker?

That's exactly right. We know that it is a tiny majority that Kevin McCarthy has. He's given a lot of power to the hard right lawmakers, who are the ones who really want to see very deep spending cuts here. And so that type of messy spectacle is exactly what Kevin McCarthy had been trying really hard to avoid. He wanted to be able to get his conference behind just one single proposal.

And how, in light of that truly messy speaker's race, does he go about trying to do that to get everyone on the same page on the debt ceiling?

Well, at first, their efforts kind of fail. They initially had an idea that they were going to lay out this grand budget proposal. And they were going to lay out all of the cuts that they were going to demand. In exchange for lifting the debt ceiling. And that ultimately, that budget, at the end of the day, was going to balance the nation's budget in 10 years. Wow, which is an extremely ambitious feat.

So something far less ambitious, but with the same theoretical endpoint of communicating to the White House what it would take to lift the debt ceiling.

Exactly, and the thing is, even getting his members united around that more modest proposal is not easy for Speaker McCarthy. He particularly has to win over again. Really, the same group of conservatives that we talked about back in January. Because there's a critical block of hard right lawmakers in his conference. Who just do not want to raise the debt ceiling really under any circumstances. And in fact, pride themselves on the fact that they've never voted to do that, ever. And so he really sets out to do that in a couple of ways.

The problem is, it's not clear McCarthy has the votes from his own Republicans.

Are Republicans going to pass this bill or not? And I have to tell you, Michael, it's very rare for congressional leadership to schedule a vote on a bill without being absolutely sure that it's going to pass.

House Speaker Kevin McCarthy can only afford to lose four potential GOP votes to pass the bill. So how many holdouts are there, yourself included? Twice that?

I'm leaning against voting for it at this time. Every program has got to be frozen.

We can't allow programs to grow 6, 8, 10%.

I'm voting no.

The Yeas are 217, the Nays are 215. The bill is passed.

McCarthy had the votes.

So several hard-right Republicans who do not ever make compromises of any kind, made a compromise here.

Exactly that's why this was such a big deal.

So, for Speaker McCarthy, this is a real accomplishment.

Yeah, I think that's right. I think you have to give credit where credit is due. And I mean, look, you started the year in hellish circumstances, with these hard-right lawmakers subjecting him to a humiliating vote after humiliating vote. And here, on something that actually really matters, on a matter of policy, he kept his conference largely united.

Right, he delivered. Okay, let's turn to what's actually in this bill. What have all these House Republicans demanded in return for actually raising the debt ceiling?

So, first and foremost, they're calling for sweeping spending cuts, essentially a 14 cut over the next decade. Wow. And it takes aim at several of the key accomplishments of the Biden administration so far. It would look to claw back some of the climate measures he was able to pass through Congress. It would claw back money that he had appropriated to the I.R.S to try to improve enforcement of the highest earners to make sure that they were paying their fair share of taxes.

Hmm, so if you're President Biden? This Republican plan to get the debt ceiling lifted now looks like a plan to more or less gut your domestic agenda. And it probably looks extremely painful.

That's right. The message here that Republicans have sent to President Biden is that if you want our votes to raise the debt ceiling, then you President Biden are going to have to give us a pound of flesh. Mm-hmm. And the White House and Democrats, I think, were really hoping, or maybe expecting, that House Republicans were going to be in complete disarray. That they were going to be beset by infighting. And maybe never really coalesce around a starting negotiating position. And I think the fantasy, honestly, was that then House Republicans would simply have to raise the debt ceiling if they couldn't come up with a solution of their own.

Right, basically, McCarthy was able to convince these conservative Republicans to focus on Biden, and by focusing on Biden rather than on fighting with McCarthy. They have forced Biden to now sit down with them and negotiate.

That's right.

Just as it took me 15 rounds to win. Speaker, the one thing I have promised the American public, I will never give up on you.

And they have done all this work to get to the hard part.

You've underestimated us, we've done our job, the only body in here that's done theirs.

McCarthy is going to have to negotiate with the White House, he's going to have to negotiate with Democrats. And he's going to have to come back to his conference with some sort of compromise. And that is going to be the test for him and for his speakership.

I've sat down with the President on February 1st, he ignored the rest of the time. now he should sit down and negotiate.

I'm Julie Turkowitz, I'm a reporter at The New York Times. I have been trying to understand changes in migration, so I traveled with photographer Federico Rios to the Darien Gap. This hot, mountainous, 70-mile stretch of jungle straddling the border of Colombia and Panama, we're hiking through a river, just like covered in mud.

So, Katie, let's now turn to this hard part, these negotiations between Republicans and the White House. What are Democrats? What is the president saying about this debt ceiling bill? What has been their reaction to this platter of cuts and rollbacks from House Republicans?

Well, unsurprisingly, Democrats absolutely hate it. Speaker McCarthy and House Republicans want to force working Americans to accept either a punch to the gut or a blow to the head. Chuck Schumer has taken to the Senate floor numerous times to rebrand it. It might as well be called the Default on America Act, because that's exactly what it is d-o-a.

I guess I'm curious, though, Katie, what if President Biden just said, No, I will not negotiate with you? And here's why I don't think that raising the debt ceiling should have any strings attached to it, I just want you to raise the debt ceiling period. And I won't have a conversation about doing that if it involves any of these spending cuts or policy rollbacks.

Well, the problem with that strategy is. It seems extremely plausible that there would be a number of hard right Republicans who would be more than happy to call his bluff. Who would hold fast to their pledge not to raise the debt ceiling without any conditions? And that would force us into a default, which our colleagues who cover the economy have said would have dramatic, disastrous economic consequences globally. And aside from all of the economic pain that would cause, there's also the fact that President Biden has announced his reelection campaign and what president wants to run for reelection during a recession.

So given that, what do we expect these negotiations to actually look like, how much do we expect everyone to move toward each other?

Well, as with any negotiations, both sides theoretically have to start inching toward the middle to find some sort of common ground. And that is where the dynamics become incredibly dangerous for Speaker McCarthy. Because he is going to have to negotiate with a White House, with Senate Democrats, who will absolutely not swallow some of the demands his conference has stipulated. And so, at the end of the day, whatever deal he strikes with Democrats is going to be a watered down version of the bill. He just barely was able to pass. And he is going to have to take that watered down product back to his conference, including the incredibly conservative lawmakers he's been able to appease so far. And sell them on this product, get them to vote on this deal.

And because his majority is so narrow, as we've talked about with you. If just a handful of Conservative House Republicans say no. I will not agree to a watered down bill to raise the debt ceiling, then McCarthy won't have enough votes to pass this watered down bill. And then what?

Well, in that situation, at least, the White House and Senate Democrats hope that a few moderate Republicans might be willing to vote for this watered down solution. But then Democrats would essentially come in and bail McCarthy out. And McCarthy would be able to pass this deal by leaning on lawmakers in the opposing party. And that obviously would be politically catastrophic for him as speaker.

Just explain that why? That's politically catastrophic.

It would be a political catastrophe for him because he would essentially be ignoring the will of his own members to raise the debt ceiling. Something they don't want, using Democratic votes, votes from the opposing party, the enemy party.

Right, a betrayal.

Exactly, and it is not hard to imagine in those circumstances that at least one lawmaker would be so incensed by this act of betrayal that they would move to try to oust McCarthy from the speakership, as any one lawmaker is now able to do as a result of the concessions McCarthy made to become speaker in the first place.

In other words, lifting the debt ceiling and sparing us all. An economic catastrophe is almost guaranteed, in one way or another. To imperil Kevin McCarthy's speakership, a speakership he barely got in the first place.

Well, look after. He won this floor vote, passing Republicans opening offer in these negotiations. Speaker McCarthy came off the House floor and he said, You see, I had it. You guys always underestimate me, don't underestimate me. And so it is possible that there is a world in which he is able to pull this off. To raise the debt ceiling and keep all of his members happy.

Katie, Thank you very much.

Thanks, Michael.

We'll be right back.