McCarthy faces competing interests in Biden debt meeting

WASHINGTON — Five months after he grabbed the gavel, this week marks the start of a defining challenge of Speaker Kevin McCarthy’s two decades in elected office: whether he can strike a deal with President Joe Biden that averts an unprecedented debt default and quells the hard-right conservatives ready to revolt against him.

Failing to raise the debt limit in the next three weeks could be catastrophic for the U.S. economy, but neglecting to secure the spending cuts his right flank pushed for could spell doom for McCarthy’s career.

To achieve his lifelong ambition of becoming speaker, the California Republican allowed hard-right conservatives to put him in a political straightjacket, and any one of them can now force a vote to remove him if he doesn’t come through.

At a high-stakes White House meeting on Tuesday, McCarthy will try to juggle those competing interests and jump-start negotiations with Biden that have been stalled since their first and only substantive, face-to-face meeting at the White House on Feb. 1.

Biden has insisted that he’s happy to negotiate spending for fiscal year 2024 after Congress agrees to hike the debt ceiling with no strings attached. But a clean debt bill is a nonstarter for McCarthy.

Twice this year, McCarthy proved the naysayers wrong — he captured the speaker’s gavel after a grueling 15 rounds of voting and then muscled his plan to hike the debt ceiling and enact big spending cuts through the House by the slimmest of margins. That remarkable show of GOP unity strengthened his hand in the debt standoff, but the real test for McCarthy will be if he can keep his grip on the gavel and negotiate with the Senate and the White House on legislation that can pass and become law.

Going into the meeting, McCarthy seems to be keeping his cards close to his chest. A McCarthy spokesman did not respond to a request for comment.

McCarthy is an “honest man” but he “just about sold away everything [to the] far, far right,” Biden said in an interview with MSNBC host Stephanie Ruhle ahead of his meeting with congressional leaders. 

“There’s the Republican Party and there’s the MAGA Republicans,” the president said, “and the MAGA Republicans really have put him in a position where in order to stay speaker he has to agree — he’s agreed to things that maybe he believes, but are just extreme.”

Motion to vacate

During the knock-down, drag-out speaker battle in January, Rep. Matt Gaetz, R-Fla., emerged as McCarthy’s most fervent foe, vowing that the California Republican would never seize the gavel. In the end, Gaetz folded his cards, but he extracted concessions that allow him to continue to be a thorn in the speaker’s side.

Gaetz or one of his allies now have the power to trigger a so-called “motion to vacate” if McCarthy cuts a debt deal with Biden and the Democrats that they feel is too liberal. He was already one of four GOP lawmakers who voted against McCarthy’s debt ceiling package that narrowly passed the House 217-215 — with just one vote to spare.

Gaetz and his camp believe they have the upper hand over McCarthy, said one Gaetz ally in Congress. “He didn’t get taken off one committee and he is right back in the news, and not in a negative light, » the lawmaker said.

It’s easier said than done, but moderate Republicans argue that McCarthy should focus on getting the best deal he can with Biden on debt and spending cuts rather than worry about threats to his unstable speakership.

“A four-seat majority by definition is difficult. I didn’t like the single person to vacate rule,” said Rep. Don Bacon, R-Neb., who represents one of 14 GOP House districts that Biden won in 2020. “I think the speaker can’t let this fact dominate though, and he seems to be playing this right. »

“Good policy is good politics, and he’s winning,” Bacon said.

Rep. Dusty Johnson, R-S.D., chairman of the Republican Main Street Caucus, which describes itself as a bloc of pragmatic lawmakers, made clear that McCarthy will need to “deliver” a deal to his 222 members that addresses what Republicans see as out-of-control federal spending.

One idea in the House-passed McCarthy plan is stricter work requirements for those who rely on safety-net programs like Medicaid and food stamps.

I think Kevin McCarthy will have a lot of latitude on the specifics. He won’t have as much latitude on the magnitude of the deal. Republicans believe that major action is needed now,” Johnson said in an interview.

“We don’t necessarily have to have every single thing exactly the way we proposed it,” Johnson continued. “But the final package does need to be a substantial change in how our country spends and borrows money. And Kevin McCarthy is going to have to deliver that. And he understands that, and he’s prepared to do it.”

Another pressure point for McCarthy is that he’s defending his fragile House majority in 2024. Trying to exploit that vulnerability, Biden on Wednesday will hold a campaign-style rally in the district of Rep. Mike Lawler, R-N.Y., who last year flipped a Democratic-held seat in the Hudson River Valley.

Ahead of Biden’s visit, Lawler maintained he would not allow a debt default to happen. But he also said he believed McCarthy is in a stronger negotiating position after the House passed his debt plan.

“If we are in a situation where default is on the table, of course, the objective is to absolutely 100% avoid default, but nobody should be playing the chicken game here and trying to force somebody to blink,” Lawler said in a phone interview.

McCarthy’s hand is strengthened, Lawler argued, “because we’re the only ones that have actually acted on this.”

‘Modest pessimism’

Time is running short. Last week, Treasury Secretary Janet Yellen informed McCarthy that the U.S. could run out of measures to pay its debt obligations and default for the first time ever as early as June 1, sooner than previously expected.

« It’s widely agreed that financial and economic chaos would ensue » if the U.S. defaults, Yellen warned Sunday.

Senior Republicans aren’t confident in a Biden-McCarthy deal, but they argue that things are moving in the right direction after House Republicans passed their debt hike and spending cuts package that served as an opening bid in negotiations. 

“Instead of being at the depths of the ocean, I’m merely drowning,” House Financial Services Chairman Patrick McHenry, R-N.C., a McCarthy ally, said Sunday on CBS’s “Face the Nation. » “So, my level of optimism is from complete and utter pessimism that anything can get done to some level of modest pessimism now.”

A short-term extension of the debt limit could be one way to stave off an immediate default that would likely force a downgrade in U.S. credit rating, roil the stock market, deplete 401(k) and other retirement accounts, and possibly catapult the economy into recession.

Although there has been bipartisan skepticism of a short-term deal, both the White House and key Republicans like McHenry say all options must be kept on the table given that the deadline is just three weeks away.

Punting the debt hike for several months would align the issue with the annual government funding process — which will run out on Sept. 30 — allowing Republicans to say that the two issues are moving in tandem while Biden could insist that they are on separate tracks.Boehner and Obama

Twelve years ago, another Democratic president and a GOP speaker found themselves in a similar situation. President Barack Obama and Speaker John Boehner, R-Ohio, were on the verge of a historic debt default one year before Obama would face voters as he sought a second term.

At the 11th hour, Obama and Boehner cut a deal known as the Budget Control Act that hiked the debt ceiling by $400 billion while creating a bipartisan supercommittee responsible for tackling the deficit. Before Boehner needed to raise the debt limit again in 2015, he announced his resignation, then reached another deal with Obama and then-Senate Majority Leader Mitch McConnell, R-Ky. 

Sen. Ben Ray Lujan, D-N.M., a former House assistant speaker who served in the lower chamber with McCarthy, said the Californian appears to be prioritizing saving his speakership over averting a default.

“When Speaker Boehner was confronted with this, he said, ‘Fine, bring it on. I’m here to do a job. And I’m going to do what’s right for the American people, and I’m going to stand by that ideal.’ That does not appear to be where Speaker McCarthy is, which is, ‘Hold on to the speakership,’ which seems to be the priority. In this case, preventing the default should be the priority,” Lujan said in an interview.

“You wanted to be speaker, you’re in that position. Now, you have a responsibility for the entirety of the American people, our country, » the senator added. « And so with that responsibility comes tough decisions that have to be made.”

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