The formal debate over the GOP debt ceiling bill kicked off Tuesday evening. The goal of the proceedings this week, according to the House Budget Committee chairman, is to “bring the President to the negotiating table.”
As Republicans struggle to line up the votes they will need in the coming days to approve their plan, they hope it will also move the White House away from its position that the only acceptable bill is one that simply raises the debt ceiling without pre-conditions.
This bill is "just a first step toward getting our fiscal house in order and a good faith effort to bring the President to the negotiating table," said Rep. Jodey Arrington (R-TX), the House Budget Committee chair tasked with formally introducing the House GOP’s plan on behalf of House Speaker Kevin McCarthy.
"This is what I believe is a responsible approach to the debt ceiling conversations going on," he added.
The House Rules Committee on Tuesday began its consideration of the plan, formally called the “Limit, Save, Grow Act of 2023”. Once it hits the House Floor, McCarthy and his allies will need to line up the support of 218 of the 222 House Republicans for a crucial vote in the days ahead.
The vote is far from a sure thing. A host of House Republicans have expressed concerns over provisions on issues like work requirements around Medicaid access and ethanol tax credits. Reporters have been camped outside Speaker McCarthy's office Tuesday as different GOP lawmakers have visited - presumably to air their concerns.
House Democrats criticized the proposal during Tuesday’s hearing. Rules Committee ranking member Jim McGovern (D-MA) called it "a ransom note to the American people," adding: "All I can say is thank God it will never become law.”
A promised veto
As for how investors should watch the Congressional wrangling, Stifel Chief Washington Policy Strategist Brian Gardner advised in a recent note to largely ignore the policy fights for now. Those, he said, will change in negotiations.
“Passing the bill might ease the way to negotiations by giving House Speaker McCarthy some leverage in talks with the White House,” he said, while a failure could further complicate the situation.
The White House has already promised to veto the bill if it somehow also passed the Senate and reached the President’s desk. Press Secretary Karine Jean-Pierre said: “Speaker McCarthy’s bill would cut the American economy off at the knees,” citing a recent Moody’s Analytics report that found the bill would cut into near-term economic growth if enacted.
But even with the heated rhetoric, observers widely expect that if McCarthy is able to succeed in the days ahead the momentum would provide a much clearer path to negotiations - and possibly an eventual resolution to the crisis - in the weeks ahead.
But no matter how this week unfolds, Greg Valliere, the Chief U.S. Policy Strategist at AGF Investments, counsels patience for anyone expecting a quick resolution. He noted that “a final debt deal in May is unlikely” even though there is a chance of default by early June.
Ben Werschkul is Washington correspondent for Yahoo Finance.
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