GOP unites in brinkmanship over default, rejecting Biden compromises

WASHINGTON – During a closed meeting Tuesday morning at a GOP hangout a block from the U.S. Capitol, House Speaker Kevin McCarthy, R-Calif., made a pointed plea: Do not break ranks over the debt ceiling crisis.

Ahead of another round of negotiations with the White House, McCarthy told Republicans they had the upper hand in the discussions and encouraged his members to show their support for colleagues facing tough re-election bids next year as a sign of unity, according to two people in attendance, who spoke on the condition of anonymity to describe the private talk. McCarthy urged members to make sure vulnerable lawmakers would have plenty of campaign money from GOP coffers – even pledging that they would not be outraised by their opponents in the 2024 election cycle, the people said of the meeting, which took place at the Capitol Hill Club. McCarthy’s office declined to comment.

The overture reflects the GOP’s determination to stay unified behind spending cuts even as the nation heads toward the brink of a default, despite a rapidly approaching deadline, a White House suddenly eager to compromise and a Democratic-led effort to push a petition that could force a vote on raising the debt ceiling over McCarthy’s objections.

After refusing to negotiate for months, President Biden’s aides last week offered the GOP substantial concessions on the federal budget – including a freeze on spending for two years – that nonpartisan estimates have projected could cut deficits by as much as $1 trillion over the next decade.

House Republicans do appear willing to drop some provisions in a bill the chamber approved last month to raise the debt ceiling, especially a call for Biden to abandon his student loan forgiveness program and to cancel some green energy tax credits. But they’re also determined to push for more concessions that weren’t even in that legislation. Not only have they ruled out Biden’s proposals to increase revenue by closing tax loopholes – traditionally a part of bipartisan deals to lower the deficit – but they are also insisting on increasing spending on the military, homeland security and veterans services while cutting funds for domestic programs. That would be a change from how a similar standoff was resolved in 2011, when the last bipartisan bill to raise the debt limit and cut spending passed – the Budget Control Act, which affected defense and nondefense budgets equally.

“The off-ramp here is to solve the problem, to spend less than we spent last year,” McCarthy told reporters Wednesday. “That’s not that difficult. They still want to spend more. You cannot do that. No household will do that.”

The standoff is increasing the chances lawmakers do not reach agreement by June 1, when the Treasury Department says the government could run out of money. Talks at the staff level resumed Wednesday afternoon at the White House. Major stock market indexes on Wednesday were down, as Wall Street begins to focus on the risks of a possible U.S. default.

Asked Tuesday evening what Republicans were offering to get Democratic votes, Rep. Patrick T. McHenry, R-N.C., gave a brief answer: “The debt ceiling.”

“That’s what they’re getting,” added Rep. Garret Graves, R-La.

McCarthy and his top lieutenants have in recent days said the White House needs to agree to cut spending, not just keep it flat. The House GOP’s representatives have panned Biden’s negotiators, saying the White House isn’t showing enough urgency or sending people empowered to cut a deal.

White House spokeswoman Karine Jean-Pierre told reporters Wednesday that Republicans were demanding too much: “We’ve also heard some House Republicans refer to preventing default as the only concession they are willing to make. But preventing a catastrophic default is not a concession. It’s their job. Period.”

McCarthy’s hard line reflects the immense internal pressure he faces from far-right members who want aggressive budget cuts.

He must appease some of the demands made by the far-right House Freedom Caucus, which continues to insist that the House-passed legislation from last month should simply become law. But Biden and Senate Democrats have already said that won’t happen, which means GOP House leaders are trying to cut a bipartisan deal that can get a majority of their own lawmakers and also attract enough Democratic votes to pass. Without the Freedom Caucus, Republicans wouldn’t have 218 votes to raise the debt ceiling.

“While House Republicans are fighting for hard-working American families facing a woke, weaponized government at odds with our way of life, President Biden and Democrats have been dragging their feet for weeks to fight for rich liberal elitists who want more spending, more government, more corporate subsidies, and less freedom,” one Freedom Caucus member, Rep. Chip Roy, R-Texas, wrote in a memo to GOP colleagues Wednesday morning. Roy insisted the GOP should demand the House bill is made law.

Getting a “majority of the majority,” a longtime GOP House principle, requires leaders to nudge legislation to the right. And conservatives worry that the party might get steamrolled in the negotiations. Adding a potential complication, McCarthy agreed when he was seeking conservative support for the speakership in January to allow any one House member to move to oust him. So far, though, the far-right bloc has not yet publicly discussed the option of forcing McCarthy from power.

“When I put something forward, if I was buying a business or negotiating on a contract, I put it forward and I expected the person that was on the other end to put something back to me,” said Rep. Kevin Hern, R-Okla., the chair of the Republican Study Committee, a conservative group. “I didn’t go change my price. I didn’t go change my terms, until the other side acted.”

Some conservative lawmakers do not think the looming deadline is real. At the meeting Tuesday morning near the Capitol, four House Republicans rose to question the Treasury Department’s assertion that the government could run out of money by as soon as June 1. Some were more adamant than others, but many in the House Freedom Caucus emerged from the conference meeting saying Treasury Secretary Janet L. Yellen needs to show proof of the actual “X-date” – when the government can’t meet its obligations.

“I don’t believe that the first of a month is a real deadline,” Rep. Matt Gaetz, R-Fla., told reporters. “But she wanders out of some backroom in the White House with a Ouija board under her arm telling us the first of the month is the number. And we’re supposed to take that as some sort of article of faith.”

Gaetz added Republicans should hold to “absolutely no less” than the bill the House passed last month with no Democratic votes. That measure included nonstarters for the White House such as rescinding parts of the Inflation Reduction Act.

But as the debt ceiling deadline nears, McCarthy may face countervailing pressure to compromise as well.

Before Biden agreed to negotiate, powerful business interests and other nonpartisan groups had begun calling on the administration to agree to talks. Now that the administration is negotiating, that lobbying could swing in the other direction, with Republican intransigence on spending demands emerging as the primary obstacle to a deal.

“It’s beginning to build now,” said one business lobbyist in touch with senior Republicans, speaking on the condition of anonymity to reflect private conversations. “Especially if we get into next week and there’s no deal, you’ll start to see pressure from the business community of, ‘Find a way to take it and a freeze and all this other stuff is a pretty good deal.’ You’re talking $1 trillion.”

Centrist Democrats, who joined McCarthy’s call for Biden to negotiate, have been unified thus far in backing the White House offers. But a significant number of House Democrats, including some vulnerable ones, are growing more concerned over what the White House may ultimately agree to in a compromise, which could ultimately force them to vote on a bill they despise.

Other groups that supported talks may push McCarthy to compromise. The Bipartisan Policy Center, a nonpartisan think tank, was among those that had called for Biden to negotiate – but which is calling for a deal to avoid default.

“From what I can tell, the administration is being very reasonable when it comes to discretionary spending,” said G. William Hoagland, the center’s senior vice president. “From what I can tell, the administration has been willing to compromise. But both sides need to.”