The House of Representatives has passed a Republican bill that aims to raise the debt limit and reduce government funding. The bill passed with a final tally of 217-215, with four Republicans joining Democrats in voting against the legislation. The bill’s passage is a victory for House Speaker Kevin McCarthy, who worked tirelessly to amend the legislation in a 24-hour sprint that saw party leaders work past 2 a.m. ET on Wednesday morning. McCarthy made last-minute changes to the bill that won over a group of holdouts within the GOP caucus.
The last-minute revisions included a rescue for ethanol and biofuel tax credits, which were set to be eliminated under the original bill. The prospect of losing the tax breaks infuriated a bloc of Republicans from Iowa and nearby states, who threatened to sink the bill unless McCarthy agreed to preserve the tax breaks, which he did. Another group of conservatives demanded that McCarthy revise the bill to speed up the implementation of new work requirements for adults who receive food stamps or Medicaid benefits. McCarthy also agreed to that demand.
Symbolic Opening Bid
The Limit, Save and Grow Act is unlikely to become law, which could help explain why Republicans were ultimately willing to overlook McCarthy’s last-minute, backroom deals. Instead of viewing the provisions in the 320-page bill as future laws, House Republicans view the plan more as a symbolic opening bid in the negotiations that McCarthy will hold with President Joe Biden later this year over the debt limit and federal funding. “There has been a lot of hard work that’s gone into how best to start this negotiation,” House Majority Leader Rep. Steve Scalise, R-La., told reporters Wednesday.
The White House, however, sees things differently. The Office of Management and Budget declared in a formal notice to the House on Tuesday that Biden would veto the GOP debt limit bill if it ever reached his desk. “This bill is reckless attempt to extract extreme concessions as a condition for the United States simply paying the bills it has already incurred,” the statement reads. “The President has been clear that he will not accept such attempts at hostage-taking. House Republicans must take default off the table and address the debt limit without demands and conditions.”
Without congressional approval on a bill to raise the debt limit or suspend it, the United States could face the unthinkable prospect of a default. Several new reports suggest that a larger than expected drop in federal tax receipts this year may hasten the arrival of the so-called X-date. This is the projected date the Treasury Department will exhaust the emergency measures it is taking to prevent a federal debt default. A note from Goldman Sachs predicted the “debt limit deadline to fall in late July,” as long as federal tax receipts only fell by 30% over last year. If federal revenues fell by 35%, however, the x-date could move up to “early June.”
Leave a Reply