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Speaker Fight Could Preview Months of Turmoil in Congress -- WSJ

The Wall Street Journal · 01/06/2023 17:57

By Lindsay Wise, Andrew Duehren and Kristina Peterson

WASHINGTON -- House Republican infighting plunged Congress into disarray this week. The larger risk is that fractiousness could imperil some basic functions of government in the coming year.

Rep. Kevin McCarthy (R., Calif.) may yet prevail in his quest to be speaker after losing 13 ballots this week, stymied by a small group of hard-line Republicans. But the struggle to pick a House leader, typically a perfunctory process, has previewed what could well be months of turmoil over spending issues in a narrowly divided House.

Hanging in the balance is the ability of the U.S. government to stay open and pay its debts. Many of Mr. McCarthy's foes are adamantly opposed to raising the debt ceiling or cutting spending deals with Democrats, and could move to oust him from his job if he tries to do so.

Also at risk are other high-profile measures that would require agreement between House Republicans and the Democrats who control the Senate and White House: funding the Pentagon and other agencies, sending aid to Ukraine as it battles an invasion and approving food stamps for low-income people as part of the farm bill, which is typically reauthorized every five years.

"I'm more worried than I was before," said Nancy Vanden Houten, the lead economist at advisory firm Oxford Economics. "Maybe the majority of Republicans in the House don't want any kind of debt-limit crisis, but there is this small group that we've learned in the last week seems to have a fair amount of power."

To win over his opponents in the party, Mr. McCarthy has indicated he is willing to make dramatic changes to how the House operates. These would further empower the far-right House Freedom Caucus and its allies in a chamber that is split 222-212.

Mr. McCarthy on Friday made concessions to win over some GOP votes, according to people familiar with the matter, that included commitments to tie spending cuts to a debt-ceiling increase, and adding more members of the Freedom Caucus to key committees.

Mr. McCarthy also has indicated he would allow a single lawmaker to force a vote to oust the speaker. That could make bipartisan negotiations more perilous if a small group of Republicans strongly objected to concessions to Democrats. In the previous Congress, such a "motion to vacate the chair" could be brought only by party leaders.

"You're going to have a sword of Damocles above any speaker over any actual or perceived dalliance with bipartisanship," said Stewart Verdery, a former GOP Senate aide and chief executive of Monument Advocacy, a bipartisan lobbying group. The next speaker "is going to think long and hard: 'If I put a bill on the floor that has Democratic support, is this the end for me?' "

The motion to vacate plagued the two most recent Republican speakers, John Boehner of Ohio and Paul Ryan of Wisconsin, who lived under the constant threat that members of their own party might seek to unseat them. Mr. Boehner retired in 2015 rather than face such a vote forced by Freedom Caucus members. Messrs. Boehner and Ryan declined to comment.

Mr. McCarthy dismissed the idea that the rule change would hobble him. "I'd only be a weaker speaker if I was afraid of it," he said Thursday night, adding: "We have a five-seat majority. So it's not [that] one side's gonna get more than another. It's the entire conference is going to have to learn how to work together."

Republicans who have pushed for the changes and opposed Mr. McCarthy say they are trying to make House leadership more accountable with open debate -- and rein in years of poor governance.

"I realize that this hasn't been done in 100 years, but this is democracy at its best," said Rep. Ralph Norman (R., S.C.). "I don't buy that the sky is falling and the sun's not coming up." Mr. Norman was among those who switched to backing Mr. Mr. McCarthy on Friday.

Among concessions sought by Mr. McCarthy's foes are policy changes related to the year's most consequential legislative fight: raising the U.S. debt limit.

Lawmakers involved in negotiations wouldn't provide details, but fiscal conservatives have long abhorred boosting the debt limit, which authorizes the Treasury to borrow money to pay for government expenditures Congress has previously approved. They have viewed it as an opportunity to try to force spending cuts, an effort that has largely failed in recent years. The national debt exceeded $30 trillion for the first time in 2022 and has risen steadily under both Republican and Democratic administrations.

Exactly when Congress will face a deadline for action on the issue is unclear. Last June, the Bipartisan Policy Center estimated that the U.S. wouldn't exceed its roughly $31.4 trillion in authorized borrowing until at least next July.

Since then, though, changes such as a further suspension of student-loan payments, rising interest rates and continued wage growth could have altered that forecast, said Shai Akabas, the group's director of economic policy. Treasury might need to start pursuing so-called extraordinary measures to manage headroom under the debt limit soon, which could kick off the battle over the issue on the Hill.

Some lawmakers have already started discussing unorthodox ways to address the issue, including trying to use rare procedural tactics to get around Republican hard-liners in the House. One would be to file a discharge petition and force a floor vote to raise the debt limit.

The lengthy process would require a majority of the total House membership, or 218 members, to sign on publicly. It would mean that a handful of Republicans would need to join Democrats on the petition, in the face of enormous intraparty pressure.

The U.S. government missing payments to bondholders could have a major impact on the U.S. and world economies. Treasurys are a safe-haven asset across the world, with yields on 10-year Treasury bonds serving as an interest-rate benchmark.

A drop in investors' faith in Treasurys could spur a fire sale of the bonds, boosting interest rates, raising recession risks, increasing borrowing costs on the government's debt and eroding the status of the dollar as the world's reserve currency.

Treasury officials, deeply concerned about the possibility of a default, have warned against brinkmanship. In a speech last month, Josh Frost, an assistant secretary for financial markets, discussed how the 2011 battle over the debt limit weighed on U.S. economic growth. S&P downgraded the credit rating of the U.S. government during that standoff.

"We witnessed a decline in household and business confidence, a fall in household wealth as equity prices fell amid a spike in market volatility, and wider credit and mortgage spreads. Each of these shocks contributed to a slowdown in economic activity," Mr. Frost said.

Recent history suggests it will be very difficult for the two parties to agree on passing the 12 individual spending bills that together keep the government funded. The common recent practice of balling those bills into one sweeping spending package, or a stopgap measure aimed at preventing a government shutdown, could also inflame the dissident wing of the House GOP because of the package's size, leading to an impasse over government funding. The longest partial government shutdown in U.S. history started in 2018 when Republicans controlled the House, Senate and White House.

Democrats hope that Republicans' divisions mean the next speaker will have to rely on votes from across the aisle for crucial legislation.

Internecine warfare in the Republican conference could threaten the House's ability to pass additional aid for Ukraine or even the annual defense bill, known as the National Defense Authorization Act. Such legislation budgets pay raises for troops, military construction, ships and aircraft, and it has passed on a bipartisan basis for more than 60 years. Some Republican lawmakers oppose continued aid for Ukraine.

Some lawmakers and Biden administration officials have already discussed the possibility that Congress wouldn't be able to agree to any new spending bills under a GOP House. That could leave prized spending priorities for both parties -- defense spending for Republicans and social-program spending for Democrats -- stagnant for two years if Congress only passes extensions of current funding.

One place where Republican fissures were already expected to hand Democrats some leverage is the next farm bill, the cornerstone of U.S. food and agriculture policy, which expires at the end of September.

Although the measure is a priority for many rural GOP districts, Republicans have previously split over its spending on food stamps, as well as for some programs supporting U.S. farmers growing certain commodities. Versions of the farm bill initially failed on the House floor both in 2013, in a fight over food stamps, and in 2018, when conservatives tried to flex their leverage over the farm bill as part of a separate battle over immigration.

Incoming House Agriculture Committee Chairman G.T. Thompson (R., Pa.) said the leadership fight wouldn't change the inevitable calculus that the farm bill will need to be bipartisan to both pass the House and become law. The last time a bipartisan farm bill passed, in December 2018, it was opposed by 44 House Republicans and three Democrats.

Passing short-term extensions of either the farm bill or government funding. That would enable lawmakers to prevent a funding gap but wouldn't allow them to tailor the legislation to meet new policy goals.

While many House Republicans were mortified by this week's drama surrounding the speaker race, they rejected the idea that it was a preview of dysfunction to come under the House GOP majority.

Rep. Dan Crenshaw (R., Texas), who compared some of his own Republican colleagues to terrorists this week, said he is confident the party will eventually be capable of governing. "Democracy is messy," he said.

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January 06, 2023 17:57 ET (22:57 GMT)

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