McCarthy's existential debt-limit crisis

At some point this summer or fall, the United States is set to breach the debt ceiling, its self-imposed limit on how much money the government is allowed to borrow to pay back its existing loans. Technically, the country hit that limit in January, but thanks to a series of emergency stop-gaps known as "Extraordinary Measures," the Treasury Department has been able to stave off the immediate economic cataclysm that would ensue should America find itself unable to meet its various financial obligations for the first time in the nation's history. But no matter how extraordinary those measures may be, they are not a solution to the country's dwindling ability to repay its past debts — for that, all eyes are on Congress, which must raise the debt limit so the nation can quite literally continue its business, as usual.

While legislation to raise the debt ceiling has long been considered routine, the past several decades have infused the process with a crippling sense of acrimonious partisan brinksmanship that has brought the country precariously close to financial catastrophe. And now, with the deadline for action fast approaching, lawmakers on both sides of the aisle are openly questioning whether House Speaker Kevin McCarthy (R-Calif.) will be able to not only successfully negotiate a limit increase with President Biden, but whether he'll be able to make it to the negotiating table at all.

Where do things stand?

Congressional Democrats and the Biden administration have been unified in demanding a "clean" debt limit increase without linking it to the various budget and spending cuts many Republicans have demanded in exchange, calling any such negotiations a "nonstarter" to be addressed only after the limit is raised. McCarthy, however, has focused on passing a proposed bill to raise the debt ceiling while simultaneously cutting spending as a sign to Democrats that he can control the same slim Republican House majority that historically delayed — and nearly derailed — his speaker's bid to begin with. Even though any such bill would presumably be dead on arrival in the Democrat-held Senate, McCarthy's rationale seems to be that by showing his ability to unite House Republicans around a concrete list of budgetary demands, he will gain the upper hand in any subsequent negotiations with the Biden administration.

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In spite of his promise on Monday to hold a full House vote on that still-unformed measure "in the coming weeks," there has been a growing chorus of lawmakers and pundits casting doubt on whether McCarthy can codify his party's varying demands and pass them through his chamber. And if he can't, where might that leave not only his speakership, but the financial fate of the country at large?

In part, McCarthy's dilemma is one of specificity, with far-right Freedom Caucus chair Rep. Scott Perry (R-Penn.) telling reporters that he doesn't "know what's in the package completely" after the speaker walked his colleagues through an overview of his proposed legislation during a closed-door GOP meeting. "I know what was on the screen," Perry said, adding "I don't think that's the entire package."

After Tuesday's meeting, Rep. Nancy Mace (R-S.C.) told reporters she was similarly "not there yet" on McCarthy's plan. Mace, who has worked to stake out a more moderate position within her party, stressed that Republicans need "to have a plan."

"You're going to walk into the debt ceiling vote without a plan?" she added. "That's not going to bode well for the outcome."

Citing the need "to resolve major questions like the dollar amount, and the duration, and the policy concessions we are seeking from the Senate," longtime McCarthy foe Rep. Matt Gaetz (R-Fla.) similarly cautioned his party's leadership not to "prognosticate the end-zone dance before we draw the game plan."

McCarthy's bill "couldn't possibly have 218 votes," Gaetz noted, "because it doesn't even exist."

Likely motivated by his colleagues' skepticism, McCarthy finally unveiled his official "Limit, Save, Grow" bill on the House floor a few days later, claiming that it would raise the debt ceiling while cutting $130 billion out of the federal budget in things like COVID funds and Biden administration efforts to bolster the Internal Revenue Service, achieving a proposed $4.5 trillion in savings.

Watch On

"President Biden has a choice," McCarthy exclaimed toward the end of his brief remarks. "Come to the table and stop playing partisan political games or cover his ears, refuse to negotiate, and risk bumbling his way into the first default in our nation's history."

But even the long-sought-after specifics of the measure may not be enough to keep some Republicans from opposing the bill. Just minutes before McCarthy spoke on the house floor on Wednesday, Rep. Tony Gonzales (R-Texas) refused to confirm to reporters whether he was on board with the debt limit increase after meeting with the speaker that morning. Instead, Gonzales demurred, saying, "we'll see, we'll see. I've been very clear where I'm at" in his previous threats to vote against McCarthy's plan if the GOP moves forward with what he deemed an "unChristian" immigration bill.

Gonzales' wavering, coupled with the apparent hard-nos from Reps. Eric Burlison (R-Mo.) and Tim Burchett (R-Tenn.) for any debt ceiling raise, means McCarthy may have already lost three of the four votes he needs to reach 218 and show he can pass the "Limit, Save, Grow" bill under his own power.

What about the other side of the aisle?

Democrats have been not-unsurprisingly dour about McCarthy's ability to keep his caucus in line. Calling the speaker's latest public offerings "a recycled pile of the same things he's been saying for months," Senate Majority Leader Chuck Schumer (D-N.Y.) argued earlier this week that nothing McCarthy has proposed "has moved the ball forward an inch."

"It's still not clear that Speaker McCarthy has the votes to even pass this," he added.

Schumer has been vocal about what McCarthy's baseline challenge is, telling The New York Times that the "dangers of slipping into default will only increase as the toxic dynamic within the House GOP gets worse day by day."

Not that the potential for economic disaster has spurred Democrats en masse to lend McCarthy a hand. Instead, the party appears content to watch the speaker struggle to secure the 218 votes he needs. With just a four-vote margin of error for McCarthy within his own party — one which, to date, the speaker hasn't bridged — one house Democrat told Axios the GOP is "in a hole and digging, so why take away their shovels?"

What's McCarthy's worst-case scenario?

In a sign of Congress' dubious view of McCarthy's leadership abilities, the bipartisan Problem Solvers Caucus has already begun working on an emergency plan to avoid a debt ceiling default should the White House and the speaker be unable to finalize an agreement. Although it's unlikely that the Problem Solvers' plan would be approved into law, that the group is publicly working on this type of contingency suggests a measure of skepticism as to whether the speaker can get his caucus over the finish line on what is largely a symbolic negotiation tactic.

Even McCarthy himself hedged when asked by CNBC's Sara Eisen whether he had enough GOP support for his still-nebulous plan, saying simply, "I think I have the support of America. I'll get the party behind it."

McCarthy later projected firmer confidence, telling reporters that "yes" he believed his measure would pass the House when put to a vote the following week. And from his remarks introducing the bill, it seemed apparent that he was focusing not only on rallying his own caucus, but retaking momentum for the negotiations in the coming months. The Biden administration, meanwhile, dismissed the proposed bill as "the same old trickle-down dressed up in MAGA clothing."

Should McCarthy fail to secure his self-imposed vote — or even struggle as he did before ultimately attaining the speaker's gavel — his attempt to project an impression of strength and unity may further expose the very weaknesses and fracture points he'd hoped to erase in the first place.