Kevin McCarthy faces debt-limit dilemma as House GOP ratchets up demands amid speaker bid

House Republicans are plotting tactics for their new majority and weighing how to use their leverage to enact a laundry list of demands, with many zeroing in on an issue with enormous economic implications: Raising the nation’s borrowing limit.

It’s an issue confronting House GOP Leader Kevin McCarthy, who is rounding up the votes to win the House speaker race and facing pressure from some of his colleagues to more forcefully detail how he plans to handle the sensitive topic before they decide whether to support him on January 3 for the most powerful position in Congress.

In interviews with CNN, more than two dozen House GOP lawmakers laid out their demands to avoid the nation’s first-ever debt default, ranging from new immigration policies to imposing deep domestic spending cuts. And several Republicans flatly said they would oppose raising the borrowing limit even if all their demands were met, making McCarthy’s narrow path even narrower.

“I’m a no, no matter what,” Rep. Tim Burchett, a Tennessee Republican, said of raising the debt ceiling.

Despite Congress suspending the nation’s borrowing limit three times when Donald Trump was president, even under all-GOP control of Washington, lawmakers say it is highly uncertain how the matter will be dealt with in a divided Congress next year — reminiscent of the furious battles between House Republicans and Barack Obama’s White House that put the country on the brink of economic disaster.

For McCarthy, the debt ceiling debate will represent one of his most difficult balancing acts if he’s elected speaker: He would need to work with Senate Democrats and President Joe Biden to cut a deal and avoid economic catastrophe without angering his emboldened right flank for caving into the left. And unlike other bills in the GOP House that will die in the Democratic-led Senate, a debt ceiling increase is one of the few must-pass items awaiting the new Congress — something many Republicans see as critical leverage.

Some Republicans say it is incumbent upon McCarthy to spell out his strategy on the issue before they decide if they will support him in the speakership race — when the California Republican can only afford to lose four GOP votes. In one private meeting with a member of the House Freedom Caucus, McCarthy was urged to take a harder public stance on the coming policy issues for next year, according to a person familiar with the matter.

“Several (House Freedom Caucus) members have made spending a main issue,” one GOP lawmaker who has been critical of McCarthy told CNN.

Rep. Scott Perry, the leader of the hardline Freedom Caucus, confirmed it’s an issue that has been broached with McCarthy as he has been wooing members ahead of next month’s vote.

“Debt ceiling has been a conversation that has been perennial in every single conversation or meeting around here since I’ve been here,” the Pennsylvania Republican said in an interview.

But some moderate Republicans — whom McCarthy needs to protect in order to keep their fragile majority in 2024 — have expressed uneasiness over using the debt ceiling as a bargaining chip, risking both a catastrophic default and the political blame, especially if Republicans push for cuts to popular entitlement programs like Medicare and Social Security. Republicans remember 2011 all too well when a proposal from then-Rep. Paul Ryan to overhaul Medicare became fodder for attacks that depicted him rolling an elderly lady in a wheelchair off a cliff.

“We shouldn’t put the United States in a position to default on our debt, clearly,” said Rep. Dusty Johnson, a South Dakota Republican. “But I also think every member of Congress needs to acknowledge that the $32 trillion debt is not in our national interest.”

Rep. Chuck Fleischmann of Tennessee said the debt ceiling increase is part of a discussion “we should have had a long time ago — to talk about some structural solutions.”

But he added: “I think the vast majority of responsible legislators realize this is money already spent and that we can never put the United States in a default position.”

Other Republicans, however, argue that the fears of going off the fiscal cliff are overblown.

“I don’t fear not raising the debt ceiling, because if we didn’t raise the debt ceiling, all that would mean we’d have to cut discretionary spending so we stop spending more than we’re taking in,” said Rep. Bob Good of Virginia, an anti-McCarthy Republican. “That’s a panic here in Washington because we’re so beholden to spending.”

Indiana Rep. Greg Pence added of raising the debt limit: “It’s a no.”

McCarthy told CNN in an interview before the midterm elections that he wouldn’t raise the borrowing limit without getting some sort of spending cuts in return, though he was light on specifics.

“If you’re going to give a person a higher limit, wouldn’t you first say you should change your behavior, so you just don’t keep raising and all the time?” McCarthy asked. “You shouldn’t just say, ‘Oh, I’m gonna let you keep spending money.’ No household should do that.”

Fears over a stalemate

Democrats had hoped to raise the debt ceiling in the current lame-duck session of Congress, but they’re running out of time and there’s little political will to do so since the borrowing limit won’t need to be raised until next year some time. The Treasury Department declined to comment when asked when the debt ceiling would need to be raised again, though Goldman Sachs indicated in an analysis that “funds could run dry as soon as July and as late as October.”

Before that point, the divided Congress will need to act, even as the White House has made clear its opposition to attaching strings to the debt ceiling hike — namely if it involves cuts to Medicare or Social Security.

“Telling the middle class out of the gate, before the new Congress has even begun, that working to override their will and hollow-out the benefits they have earned throughout their lives is a stone-cold nonstarter,” said White House spokesman Andrew Bates.

Still, conservatives, eager to use their newly found leverage, have already begun to outline what concessions they want from Democrats.

Rep. Jeff Duncan, a South Carolina Republican, wants to see cuts to both discretionary and mandatory spending, including entitlement programs such as Social Security and Medicare. But he said no one currently drawing benefits should be impacted, and that the structural reforms should be designed to make the programs more solvent for future generations.

“There are benefits — Social Security, Medicare, veterans’ benefits — that people paid into it or were promised,” Duncan said. “But there are other welfare programs in the Farm Bill, the nutrition title. All of that needs to be addressed. Because truly they’re the drivers of some of the spending.”

Even though debts spiked under Trump and Republicans raised few objections to rising deficits, Republicans say Biden’s push for more spending on his domestic priorities has forced them to toughen their demands ahead of the next debt limit increase.

“Border Security and getting rid of all the Covid spending that we don’t need,” said Rep. Byron Donalds, a Florida Republican, when asked about his demands for raising the debt ceiling.

Others were just as emphatic.

“Hell no,” Rep. Chip Roy of Texas said when asked if he’d support a clean debt ceiling hike without slashing discretionary programs at federal agencies and mandatory spending, which includes entitlement programs like Medicare and Social Security.

“There’s a lot of fat and garbage that’s way off the mission that we can cut,” Roy said.

Good, a member of the House Freedom Caucus, wants Republicans to use their leverage in the debt ceiling fight to push for other policy changes. The Freedom Caucus, a band of roughly 40 Trump-aligned Republicans, is known for using hardball tactics on the House floor to pull legislation to the right — and McCarthy needs the support from nearly all of those members to win the speakership.

“There’s other things that we as Republicans should be fighting for as part of that, things like ending the vaccine mandate, securing the border, restoring Trump’s energy policies,” Good said.

But some Republicans have signaled there may be no scenario in which they’re willing to raise the nation’s borrowing limit.

“I’m not sure I’ve seen anything that’s going to be able to convince me to raise the debt ceiling,” said Rep. Andy Biggs, a former Freedom Caucus chief who is also opposing McCarthy for speaker. “This place does nothing but create mounting structural deficits that are huge, which in turn grows the national debt, and we don’t have a plan to bring it down. Why would we lift it again?”

That’s a proposition that has Democrats worried.

“McCarthy has said he may well use the debt limit as a leverage. That’s very high stakes to use debt limit, which would plunge us and the world economy into a tailspin,” said Rep. Steny Hoyer, a Maryland Democrat and the outgoing House majority leader.

How McCarthy plans to approach the various looming fiscal showdowns next year has begun to factor into the speaker race. Last month, Rep. Ralph Norman of South Carolina pledged to oppose McCarthy on the floor, citing McCarthy’s refusal to support a seven-year balanced budget.

Norman was among a cross section of Republicans who recently met with McCarthy in his office to discuss a package of rules changes.

Rep. Kevin Hern of Oklahoma, the head of the conservative Republican Study Committee, said the group also talked about upcoming budget battles, “how to deal with the relationship with the Senate,” and “how to push bills out of the House of Representatives with the most conservative votes that we can possibly get.”

While the prospect of a high-stakes fiscal showdown has put members in both parties on edge, some Republicans believe cooler heads will prevail.

“Just the maximum,” said Rep. Joe Wilson of South Carolina, when asked what he wanted for a debt ceiling hike. “And I have faith in Kevin McCarthy that he will achieve it.”

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